Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The adjusted trial balance for the year of Balsamo Corporation at December 31, 2018, follows. (Click the icon to view the adjusted trial balance.) Read

image text in transcribedimage text in transcribed

The adjusted trial balance for the year of Balsamo Corporation at December 31, 2018, follows. (Click the icon to view the adjusted trial balance.) Read the requirements Requirement 1. Prepare Balsamo Corporation's 2018 single-step income statement, statement of retained earnings, and balance shoot. Begin by preparing Balsamo's 2018 income statement. Credit Balsamo Corporation Income Statement Year Ended December 31, 2018 Revenue 92900 4,700 9,500 800 Balsamo Corporation Adjusted Trial Balance December 31, 2018 Account Debit Cash $ 12,400 Accounts receivable 19,000 Supplies 2.700 Prepaid rent 1,100 Equipment 36,600 Accumulated depreciation equipment Accounts payable Interest payable Unearned service revenue Income tax payable Note payable Common stock Retained earings Dividends 10,000 Service revenue Depreciation expense equipment 1,200 Salary expense 40,300 Rent expense 10,400 Interest expense 3,200 Insurance expense 3,300 Supplies expense 2,900 6,600 Income tax expense Total $ 149,700 $ 700 2,900 18,200 15,000 5,000 Income before tax 92,900 Now prepare the statement of retained earnings. (Include a subtotal after the "Add" line of the statement.) Balsamo Corporation Statement of Retained Earnings Year Ended December 31, 2018 Retained earnings, December 31, 2017 Add: Net income Subtotal Less: Dividends Retained earnings, December 31, 2018 149,700 Print Done Prepare the balance sheet. (If a box is not used in the balance sheet leave the box empty; do not select a label or enter a zero. Do not classify the balance sheet into current and long-term sections.) Balsamo Corporation Balance Sheet December 31, 2018 Assets Liabilities Stockholders' Equity Less: Requirement 2. Balsamo's lenders require that the company maintain a debt ratio no higher than 0.50. Calculate Balsamo's debt ratio at December 31, 2018, to determine whether the company is in compliance with this debt restriction. If not, suggest a way that Balsamo could have avoided this difficult situation. Begin by selecting the labels and then enter the amounts to compute Balsamo's debt ratio at December 31, 2018. (Round your calculation to two decimal places.) Debt ratio = = Balsamo's lenders require that the company maintain a debt ratio no higher than 0.50. Balsamo is with this debt restriction at December 31, 2018

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Performance Auditing A Measurement Approach

Authors: Ronell B. Raaum CGAP CGFM, Stephen L. Morgan CIA CGAP CFE CGFM

2nd Edition

0894136607, 9780894136603

More Books

Students also viewed these Accounting questions

Question

Differentiate (a) y = 1/sin 1 x (b) f(x) = x arctan x.

Answered: 1 week ago