$1.$ A service business has the following financial information as of the end of the year prior to recording

closing entries:

Revenues $$12,000$

Expenses $$7,000$

Owner's capital $$10,000($credit balance$)$

Owner's withdrawals $$2,000$

Assets $$28,000$

Liabilities $$15,000$

A$.$ Determine the balance of the income summary account after closing all other accounts EXCEPT

income summary. Be sure to label the balance as DEBIT or CREDIT. Be sure to show your

work.

B$.$ Determine the balance of the owner's capital account after closing ALL accounts including income

summary. Be sure to label the balance as DEBIT or CREDIT. Be sure to show your work.

$2.$ A service business has the following financial information as of December $31$ prior to recording

closing entries:

Service revenue $$8,000$

Rent expense $$1,000$

Salary expense $$3,500$

Depreciation expense $$1,500$

Owner's withdrawals $$750$

Prepare all the necessary closing journal entries required at December $31.$

$2$

$3.$ A business has the following financial information at the end of the year:

Cash $$2,000$

Accounts receivable $$14,000$

Long term debt $$10,000$

Inventory $$12,000$

Total equity $$62,000$

Accounts payable $$8,000$

Wages payable $$1,500$

Total plant assets $$25,000$

Accumulated depreciation $$6,000$

Determine the current ratio as of the end of the year. Be sure to show your work.

$4.$ On January $15,$ a business PURCHASES merchandise inventory on credit from a vendor for $$11,000.$

The terms of the sale are $2\%/10,$ net $30.$ The business uses the perpetual inventory system.

A$.$ Prepare any necessary journal entries to record the purchase on January $15.$

B$.$ On January $17,$ the business returns $$1,000$ of merchandise inventory from the January $15$

purchase to the vendor. Prepare any necessary journal entries to record the return on January $17.$

C$.$ On January $22,$ the business pays the entire amount due on the January $15$ purchase. Prepare any

necessary journal entries to record the payment on January $22.$

$5.$ On January $15,$ a business SELLS merchandise inventory on credit to a customer for $$11,000.$ The

terms of the sale are $2\%/10,$ net $30.$ The cost of the inventory to the business was $$8,000.$ The

business uses the perpetual inventory system.

A$.$ Prepare any necessary journal entries to record the sale January $15.$

B$.$ On January $17,$ the customer returns $$1,000$ of merchandise inventory from the January $15$ sale.

The cost of the inventory to the business was $$727.$ Prepare any necessary journal entries to

record the return on January $17.$

C$.$ On January $22,$ the business receives payment from the customer for the entire amount due on the

January $15$ sale. Prepare any necessary journal entries to record the receipt on January $22$