Problem I: The adjusted trial balance of Debit Company is shown below:

Debit Company

Adjusted Trial Balance December 31, 2020

Cash $6,500

Accounts receivable 8,000

Supplies 1,000

Prepaid Rent (3 months) 2,500 Equipment, net 42,000
Accounts payable		$4,000
Salary payable		2,000
Unearned revenue (2 month advance)		2,000
Note payable long term		14,000
Common stock		10,ooo
Retained earnings		14,700
Dividends	4000
Service revenue		75,000
Salary expense	40,000
Rent expense	10,ooo
Supplies expense	1,500
Depreciation expense	5,000
Utilities expense	1200
Total	S121.700	$121.700

Compute the company's current ratio and debt ratio at the end of the year.

. Assume the current ratio. and debt ratio from the previous year was 2.50 and .40 respectively. Did the ratios improve or deteriorate from last vear?

Refer to the data in Problems I and 2. Journalize the closing entries at the end of the vear. Set up a T-account for Retained Earnings and post to that account. Does the T-account balance agree with the Retained Eamings balance in the balance sheet?