Brothers Anthony and Christopher Gaber began operations of their tool and die shop (A & C Tools Inc.) on January 1, 2013. The company€™s fiscal year ends on December 31. The trial balance on January 1, 2014, was as follows:

Transactions and events during 2014 are as follows:
a. Borrowed $ 10,000 cash on a 12 percent note payable, dated March 1, 2014.
b. Purchased land for future building site; paid cash, $ 9,000.
c. Earned revenues for 2014 of $ 160,000, including $ 50,000 on credit.
d. Sold 3,000 additional shares for $ + cash per share.
e. Recognized other expenses for 2014, $ 85,000, including $ 20,000 on credit.
f. Collected trade receivables, $ 24,000.
g. Purchased additional assets, $ 10,000 cash (debit other assets account).
h. Paid trade payables, $ 13,000.
i. Purchased service supplies on account, $ 18,000 (debit to Account No. 03).
j. Signed a $ 25,000 service contract to start February 1, 2015.
k. Declared and paid cash dividend, $ 15,000. Data for adjusting entries are as follows:
l. Service supplies inventory on hand at December 31, 2014, $ 12,000 (debit other expenses account).
m. Depreciation on the equipment estimated at $ 6,000 per year.
n. Accrued interest on notes payable (to be computed).
o. Wages earned since the December 24 pay date but not yet paid, $ 15,000. p. Income tax expense for 2014 payable in 2015, $ 8,000.
Required:
1. Set up T- accounts for the accounts on the trial balance and enter their beginning balances.
2. Record transactions (a) through (k) and post them to the T- accounts.
3. Record and post the adjusting entries (l) through (p).
4. Prepare a statement of earnings (including earnings per share), a statement of changes in equity for 2014, and a statement of financial position at December 31, 2014.
5. Record and post the closing entries.
6. Prepare a post- closing trial balance.
7. Compute the following ratios for 2014 and explain what they mean:
a. Current ratio
b. Total asset turnover ratio
c. Net profit margin ratio
d. Return on equity

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Debit 3,000 5,000 12,000 Account No. Account Titles Credit 01 Cash 02 Trade recervables 03 Service supplies inventory 04 Land 05 Equipment 06 Accumulated depreciaton (equipment) 07 Other assets (not detailed, to simplify) 11 Trade payables 12 Notes payable 13 Wages payable 14 Interest payable 15 ncome taxes payable 21 Contributed capital (65,000 shares) 31 Retained eanings 35 Service revenue 40 Depreciation expense 41 Income tax expense 42 Interest expense 43 Other expenses 60,000 6,000 4,000 5,000 65,000 8,000 Totals $84,000 $84,000