Smart Financial Service Co. (SFS) started business on Dec. 1 2012. During Dec. 2012, the company had the following transactions.

a.Isabel Choo, the CEO, invests $30,000 cash and office equipment valued at $10,000 in exchange for common stock that is worth $40,000.

b.Paid $3,600 cash covering upcoming 12- months' rent.

c.Purchased $2,000 of office supplies and $8,000 of office equipment, both on credit.

d.Paid a local newspaper $500 cash for printing an announcement of the office's opening. Thisis recorded in an advertising expense account.

e.Completed a consulting service for a client on credit and billed the client $5,000 for theconsulting revenue.

f.Promised to provide a financial analysis for Clark University. The client immediately paid$4,000 cash in advance for the service which will be provided next month.

g.Made a $1,000 cash payment on the equipment purchased in transaction c.

h.Paid $2,000 cash for the consultants. This is recorded in a salary expense account.

i.Paid $1,000 cash for dividends.

problem.

1.Journalize and post the transactions. Denote debit and credit clearly when you journalize.

2.Create an unadjusted Trial Balance for SFS as of Dec. 31, 2012.

3.Based on the unadjusted trial balance, determine the net income for the company during Dec.2012.

4.Based on the unadjusted trial balance, determine the values of total assets, total liabilities, andtotal equities for SFS as of Dec. 31, 2012. Report the debt ratio in terms of percentage up to thesecond decimal place (for example, 12.34%).