COMP4-2 LO4-1, 4-2, 4-3, 4-4 [3] GL Recording Transactions (Including Adjusting and Closing Entries), Preparing Financial Statements, and Performing Ratio Analysis Aubrae and Tylor Williamson began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on January 1, 2024, was as follows: FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW 129 . 1 x 1 A 2 3 4 Cash 5 Accounts receivable 6 Supplies 7 Small tools B D FURNITURE REFINISHERS, INC. Trial Balance at January 1, 2024 Debit Credit 5,000 4,000 2,000 6,000 8 Equipment 9 Accumulated depreciation (on equipment) 10 Other noncurrent assets (not detailed to simplify) 9,000 11 Accounts payable 7,000 12 Dividends payable 13 Notes payable 14 Wages payable 15 Interest payable 16 Income taxes payable 17 Unearned revenue 18 Common stock (60,000 shares, $0.10 par value) all year) 6,000 19 Additional paid-in capital 9,000 20 Retained earnings 4,000 21 Service revenue 22 Depreciation expense 23 Wages expense 24 Interest expense 25 Income tax expense 26 Miscellaneous expenses (not detailed to simplify) 27 Total 26,000 26,000 Transactions during 2024 follow: a. Sold 10,000 additional shares of capital stock for cash at $0.50 market value per share at the beginning of the year. b. Borrowed $20,000 cash on July 1, 2024, signing a one-year, 10 percent note payable. c. Purchased equipment for $18,000 cash on July 1, 2024. d. Earned $70,000 in revenues for 2024, including $14,000 on credit and the rest in cash. e. Incurred $27,000 in wages expense and $8,000 in miscellaneous expenses for 2024, with $7,000 on credit and the rest paid with cash. f. Purchased additional small tools, $3,000 cash. g. Collected accounts receivable, $8,000. h. Paid accounts payable, $11,000. i. Purchased $10,000 of supplies on account. j. Declared a cash dividend on December 1, $10,000. k. Received a $3,000 deposit on work to start January 15, 2025. 1. Paid the dividends in (j) on December 31. Data for adjusting entries: m. Supplies of $4,000 and small tools of $8,000 were counted on December 31, 2024 (debit Miscellaneous Expenses). n. Depreciation for 2024, $2,000. o. Interest accrued on notes payable (to be computed). p. Wages earned since the December 24 payroll but not yet paid, $3,000. q. Income tax expense was $4,000, payable in 2025. Required: 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. 2. Prepare journal entries for transactions (a) through (1) and post them to the T-accounts. 3. Journalize and post the adjusting entries (m) through (q). 4. Prepare an income statement (including earnings per share rounded to two decimal places), state- ment of stockholders' equity, and balance sheet. 5. Identify the type of transaction for (a) through (1) for the statement of cash flows (O for operating, I for investing, F for financing) and the direction and amount of the effect. 6. Journalize and post the closing entry. 7. Compute the following ratios (rounded to two decimal places) for 2024 and explain what the results suggest about the company: a. Current ratio b. Total asset turnover c. Net profit margin