Problem 2-5B Computing net income from equity analysis, preparing a balance sheet, and computing the debt ratio P1 A2 The accounting records of Tama Co. show the following assets and liabilities as of December 31 for Year 1 and for Year 2. December 31 Cash Year 1 Year 2 $30,000 $ 5,000 Accounts 35,000 25,000 receivable Office supplies 8,000 13,500 Office equipment 40,000 40,000 Machinery 28,000 28,500 Building $0 $250,000 Land 0 50,000 Accounts payable 4,000 12,000 0 250,000 Note payable Required 1. Prepare balance sheets for the business as of December 31 for Year 1 and Year 2. Hint: Report only total equity on the balance sheet and remember that total equity equals the difference between assets and liabilities. 2. Compute net income for Year 2 by comparing total equity amounts for these two years and using the following information: During Year 2, the owner invested $5,000 additional cash in the business in exchange for common stock, and the company paid a $3,000 cash dividend. Check (2) Net income, $11,000 3. Compute the Year 2 debt ratio. (3) Debt ratio, 63.6%