Josh and Kelly McKay began operations of their furniture repair shop (Furniture Refinishers, Inc.) on January 1, 2016. The annual reporting period ends December 31. The trial balance on January 1, 2017, was as follows:

Account Titles	Debit				Credit
Cash		10,000
Accounts receivable		9,000
Supplies		4,000
Small tools		5,000
Equipment
Accumulated depreciation (on equipment)
Other assets (not detailed to simplify)		7,000
Accounts payable						5,000
Notes payable
Wages payable
Interest payable
Income taxes payable
Unearned revenue
Common stock (70,000 shares, $0.10 par value)						7,000
Additional paid-in capital						10,000
Retained earnings						13,000
Service revenue
Depreciation expense
Wages expense
Interest expense
Income tax expense
Remaining expenses (not detailed to simplify)
Totals		35,000				35,000

Transactions during 2017 follow:

Borrowed $20,000 cash on July 1, 2017, signing a one-year, 10 percent note payable.

Purchased equipment for $18,000 cash on July 1, 2017.

Sold 10,000 additional shares on January 1, 2017, of capital stock for cash at $.50 market value per share at the beginning of the year.

Earned $126,000 in revenue. Transactions dated August 15, 2017, including $25,000 on credit and the rest in cash.

Incurred remaining expenses of $34,000, invoices dated September 15, 2017 including $7,000 on credit and the rest paid in cash.

Purchased additional small tools on September 23, 2017, $2,000 cash.

Collected accounts receivables on October 6, 2017, $12,000.

Paid accounts payable on November 11, 2017, $11,000.

Purchased $15,000 of supplies on account on November 30, 2017.

Received a $8,000 deposit on December 2, 2017, for work to start January 15, 2018.

Declared and paid cash dividends on December 17th, $17,000.

Data for adjusting entries:

Supplies of $5,000 and small tools of $6,000 were counted on December 31, 2017 (debit Remaining Expenses).

Depreciation for 2017, $4,000.

Interest accrued on notes payable (to be computed).

Wages earned since the December 24 payroll but not yet paid, $2,000.

Income tax expense was $4,000, payable in 2018.

Prepare journal entries for transactions:

1

Borrowed $20,000 cash on July 1, 2017, signing a one-year, 10 percent note payable.

2

Purchased equipment for $18,000 cash on July 1, 2017.

3

Sold 10,000 additional shares on January 1, 2017, of capital stock for cash at $0.50 market value per share at the beginning of the year.

4

Earned $126,000 in revenue. Transactions dated August 15, 2017, including $25,000 on credit and the rest in cash.

5

Incurred remaining expenses of $34,000, invoices dated September 15, 2017 including $7,000 on credit and the rest paid in cash.

6

Purchased additional small tools, $2,000 cash.

7

Collected accounts receivable, $12,000.

8

Paid accounts payable, $11,000.

9

Purchased $15,000 of supplies on account.

10

Received a $8,000 deposit on work to start January 15, 2018.

11

Declared and paid a cash dividend, $17,000.

12

Record the adjusting entry for supplies $5,000 and small tools $6,000 counted on December 31, 2017.

13

Record the adjusting entry for depreciation for the year on the equipment, $4,000.

14

Record the adjusting entry for Interest accrued on notes payable (to be computed).

15

Record the adjusting entry for wages earned by employees since the December 24 payroll but not yet paid, $2,000.

16

Record the adjusting entry for Income tax expense, $4,000, payable in 2018.

17

Record closing entry.

FURNITURE REFINISHERS, INC.
Income Statement
For the Year Ended December 31, 2017
Operating revenues:
Operating expenses:
Total operating expenses	0
	0
Other item:
	0
Net income	$0
Earnings per share

Furniture Refinishers, Inc.
Statement of Stockholders Equity
For the Year Ended December 31, 2017
	Common Stock	Additional Paid-in Capital	Retained Earnings	Total Stockholders' Equity
Balance, January 1, 2017				$0
				0
				0
				0
Balance, December 31, 2017	$0	$0	$0	$0

FURNITURE REFINISHERS, INC.
Balance Sheet
At December 31, 2017
Assets			Liabilities
Current assets:			Current liabilities:
Total current assets	0		Total current liabilities	0
			Stockholders' equity
Net book value	0
			Total stockholders' equity	0
Total assets	$0		Total liabilities and stockholders' equity	$0

Transaction	Type of Effect on Cash Flows	Direction and Amount of Effect
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11.

a. Compute the current ratio for 2017.
Current ratio
b. Compute the total asset turnover ratio for 2017.
Total asset turnover
c. Compute the net profit margin ratio for 2017.
Net profit margin		%