Question

The adjusted trial balance for Tybalt Construction as of December 31, 2017, follows.

TYBALT CONSTRUCTION Adjusted Trial Balance December 31, 2017
No.	Account Title	Debit				Credit
101	Cash	$	7,000
104	Short-term investments		23,500
126	Supplies		8,700
128	Prepaid insurance		7,500
167	Equipment		55,000
168	Accumulated depreciation—Equipment					$	27,500
173	Building		180,000
174	Accumulated depreciation—Building						60,000
183	Land		53,050
201	Accounts payable						16,000
203	Interest payable						2,700
208	Rent payable						3,000
210	Wages payable						2,800
213	Property taxes payable						1,400
233	Unearned professional fees						7,500
251	Long-term notes payable						67,000
307	Common stock						7,000
318	Retained earnings						125,100
319	Dividends		12,500
401	Professional fees earned						105,000
406	Rent earned						17,000
407	Dividends earned						2,800
409	Interest earned						2,000
606	Depreciation expense—Building		13,200
612	Depreciation expense—Equipment		8,250
623	Wages expense		25,000
633	Interest expense		5,000
637	Insurance expense		9,300
640	Rent expense		11,500
652	Supplies expense		7,300
682	Postage expense		3,000
683	Property taxes expense		3,300
684	Repairs expense		7,700
688	Telephone expense		2,600
690	Utilities expense		3,400
	Totals	$	446,800			$	446,800

The December 31, 2016, credit balance of the Retained Earnings account was $125,100. Tybalt Construction is required to make a $6,500 payment on its long-term notes payable during 2018.

Required:
1a. Prepare the income statement for the calendar-year 2017.
1b. Prepare the statement of retained earnings for the calendar-year 2017.
1c. Prepare the classified balance sheet at December 31, 2017.
2. Prepare the necessary closing entries at December 31, 2017.
3. Use the information in the financial statements to compute the following ratios:

Answer 1

1)

TYBALT CONSTRUCTION INCOME STATEMENT for the period ended December 31, 2017
Revenue
Professional fees earned	105000
Rent	17000
Dividend earned	2800
Interest earned	2000
Total revenue		126800
less:expense
Depreciation expense—Building	13200
Depreciation expense—equipment	8250
wage expense	25000
Interest expense	5000
insurance expense	9300
Rent	11500
supplies expense	7300
postage expense	3000
Property taxes expense	3300
Repairs expense	7700
Telephone expense	2600
Utilities expense	3400
Total expense		(99550)
Net Operating income		27250

2)

TYBALT CONSTRUCTION statement of retained earning for the period ended December 31, 2017
Beginning balance	125100
Net income	27250
less:DividendDeclared	(12500)
Retained earning at end	139850

1c)

TYBALT CONSTRUCTION Balance sheet December 31, 2017
Asset
current asset
cash	7000
Short-term investments	23500
supplies	8700
prepaid insurance	7500
Total current asset		46700
Non current asset
Land	53050
Equipment	55000
less:Accumulated depreciation—Equipment	(27500)
Building	180000
Accumulated depreciation—Building	(60000)
Total non current asset		200550
Total asset		247250
Liabilities and stockholders equity
current liabilities
Accountspayable	16000
Interest payable	2700
Rent payable	3000
wage payable	2800
Property taxes payable	1400
unearned profession fees	7500
note payable (short term 2018)	6500
Total current liabilities		39900
non current liabilities
Long term note payable [67000-6500]		60500
Total liabilities		100400
Stockholders equity
common stock	7000
Retained earning	139850
Total equity		146850
Total liabilities and stockholders equity		247250

2)

Date	Account	debit	credit
31 dec 2017	Professional fee earned	105000
	Interest earned	2000
	rent earned	17000
	dividend earned	2800
	Income summary		126800
	[to close revenue]
31 dec 2017	Income summary	99550
	Depreciation expense—Building		13200
	Depreciation expense—equipment		8250
	wage		25000
	Interest		5000
	rent		11500
	insurance		9300
	supplies expense		7300
	postage expense		3000
	Property taxes expense		3300
	Repair expense		7700
	utilities expense		3400
	Telephone expense		2600
31 dec 2017	Income summary	27250
	Retained earning		27250
	[to close net income]
31 dec 2017	Retained earning
	Dividend	12500
	[to close dividend]		12500