Terry Co. Balance Sheet As of 12/31/Year 3 Year 3 Assets Year 2 Current Assets Cash $526.500 $729.000 ($40.500) S972 000 S80.750 S101,250 $2,349,000 $405.000 SEBA, 500 (S202,500) $1.134.000 $121,500 $81.000 $2,227.500 5486,000 $81.000 $121,500 $101.250 S40,500 $830,250 $324.000 $41,420 $365.420 $324.000 $41,420 $365,420 Allowance for Bad Debts Inventory Prepaid Insurance Prepaid Rent Total Current Assets Long-term investments Loans to other businesses Expansion Fund Total Long-term Investments PPE Land Building Equipment Accumulated Depreciation Total PPE Intangible Assets Patents, net Total Assets Liabilities and Stockholders' Equity Cument Liabilities Accounts Payable $592.537 Income Tax Payable $283,500 Uneamed Revenue $137,700 Wages Payable $89,100 Current Portion of Loan Payable $40.500 Total Current Liabilities $1,143,337 Long-term Debt Loan Payable $445.500 Notes Payable $1,134 000 Total Long-term Debt $1,579,500 Total Liabilities $2.722,837 Stockholders' Equity Common stock $320,000 ($1 par, 560,000 authorized, 320,000 outstanding) Additional Pald.in capital $243.000 Retained Earrings $2,315 273 Accumulated OCI ($11,190) Total Stockholders' Equity $2.867083 Total Liabilities and Stockholder's Equity S5.589.920 $486.000 $648.000 $1,134,000 $1,954.250 $320,000 $891.000 S648.000 $2,268,000 ($1,053 000) $2,754,000 $567,000 $648,000 $1,053,000 (S810,000) $1,458.000 $243.000 $1,656,360 ($11,190) $2.208.170 $4.172420 $121,500 $5.589.920 $121,500 $4,172.420 Information: On August 1, Terry issued a $210,000, semi-annual, 7 year, 5.5% bond. The market rate for similar bonds on that day was 6.0%. Terry uses the effective interest method to record the amortization or premiums and discounts. Terry's management has decided to report net bonds on the balance sheet, instead of reporting the bond and its premium or discount separately. No entries have yet been made for the bond. Terry's management would like to know the effect of the sale on the following ratios: Debt to Equity Ratio (Total Liabilities/Total Equity) . Current Ratio ROA Assignment: Calculations 1. Calculate each of the three (3) ratios before you make any adjustments. 2. Make the appropriate journal entries, if any, to account for the new bond and any accrued interest (including any necessary changes to income tax expense). 3. Make any necessary changes to the financial statements. 4. Calculate the three (3) ratios after you make any adjustments