Phantom Incorporated, reported the following account balances on January 1.

	Debit	Credit
Accounts Receivable	$ 5,000
Accumulated Depreciation		$ 30,000
Additional Paid-in Capital		94,000
Allowance for Doubtful Accounts		2,000
Bonds Payable		0
Buildings	251,000
Cash	11,000
Common Stock, 10,000 shares of $1 par		10,000
Notes Payable (long-term)		11,000
Retained Earnings		120,000
Treasury Stock	0
TOTALS	$ 267,000	$ 267,000

The company entered into the following transactions during the year.

January 15	Issued 7,000 shares of $1 par common stock for $54,000 cash.
January 31	Collected $3,000 from customers on account.
February 15	Reacquired 3,040 shares of $1 par common stock into treasury for $33,440 cash.
March 15	Reissued 2,040 shares of treasury stock for $24,440 cash.
August 15	Reissued 600 shares of treasury stock for $4,600 cash.
September 15	Declared (but did not yet pay) a $1 cash dividend on each outstanding share of common stock.
October 1	Issued 100, 10-year, $1,030 bonds, at a quoted bond price of 101.
October 3	Wrote off a $1,500 balance due from a customer who went bankrupt.
December 29	Recorded $234,000 of service revenue, all of which was collected in cash.
December 30	Paid $204,000 cash for this years wages through December 31. (Ignore payroll taxes and payroll deductions.)
December 31	Calculated $10,000 of depreciation for the year to be recorded. (Ignore accrual adjustments for interest and income taxes.)

1. Prepare the journal entries to record each transaction. Review the accounts as shown in the General Ledger and Trial Balance tabs. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Use the dropdowns to select the accounts properly included on the classified balance sheet. However, you will need to enter the amount of Retained earnings. At the end of the year, the adjusted net income was $20,000.

UnadjustedAdjustedPost-closing

PHANTOM INCORPORATED
Classified Balance Sheet
At December 31
	$0
	0
	0
	0
	0
	0
	0
	$0
	0
	0
	0
	0
	0
	0
	0
	0
	0
	0
	0
	0
	0
Total	0
	0
	0
	$0

3. Calculate the Debt to Assets Ratio and analyze the impact of the Debt to Assets Ratio. (Round your answer to 2 decimal places.)

UnadjustedAdjustedPost-closing

Calculate the debt-to-assets ratio at December 31.
Debt to Assets Ratio		%
Does the company rely more (or less) on debt financing at the end of the year than at the beginning of the year?
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