The accounting records of Tama Co. show the following assets and liabilities as of December 31, 2017 and 2018.

Required

1. Prepare balance sheets for the business as of December 31, 2017 and 2018. (Hint: Report only total equity on the balance sheet and remember that total equity equals the difference between assets and liabilities.)

2. Compute net income for 2018 by comparing total equity amounts for these two years and using the following information: During 2018, the owner invested $5,000 additional cash in the business (in exchange for common stock) and the company paid $3,000 cash in dividends.

3. Compute the December 31, 2018, debt ratio (in percent and rounded to one decimal).

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December 31 2017 2018 $30,000 $ 5,000 Cash ... Accounts receivable.. Office supplies..... Office equipment.. 35,000 25,000 13,500 8,000 40,000 40,000 28,000 Machinery... 28,500 250,000 Building.... Land 50,000 Accounts payable... Note payable ... 4,000 12,000 250,000