Gaze Co.

Adjusted Trial Balance

at 31 December 2019

Debit Credit

Cash 51,402

Accounts receivable 2,400

Office supplies 600

Prepaid rent 1,440

Office equipment 64,800

Accumulated depreciation: office equipment 42,300

Accounts payable 1,680

Interest payable 432

Income taxes payable 2,100

Unearned revenue 10,800

Capital stock 36,000

Retained earnings 9,600

Dividends 1,200

Consulting services revenue 72,000

Office supplies expense 726

Depreciation expense: office equipment 9,900

Rent expense 1,212

Salaries expense 32,520

Interest expense 432

Income taxes expense 8,280

Totals 174,912 174,912

Instructions:

Using Adjusted Trial Balance above, perform the following tasks:

(5) Prepare an after-closing trial balance dated December 31, 2019 (10 points).

(6) Does the company appear to be liquid? Explain. Justify your conclusion with calculation of working capital and current ratio (15 points).

(7) Has the company been profitable in the past? What about this year? Justify your conclusion with calculation of net income percentage and return on equity (15 points).