The adjusted trial balance of Carmela Creations at June 30, 2020, the end of the company's fiscal year, is provided.
Required
Carmela Creations Adjusted Trial Balance June 30, 2020 Account Debit Credit Cash $ 13,800 15,870 18.786 2.900 49,000 10.200 72,000 10,190 28,000 Accounts receivable Supplies Prepaid insurance Equipment Accumulated amortization-equipment Building Accumulated amortization-building Land Accounts payable Interest payable Salaries payable Uneared service revenue Note payable, long-term A. Kruger, capital A. Kruger, withdrawals Service revenue Amortization expense-equipment Amortization expense-building Salaries expense Insurance expense Interest expense Utilities expense Supplies expense Total 25,080 1,894 1,462 3,100 58,400 59,489 28,170 95,000 4,420 2.500 13,880 2,000 8,700 2,640 2,149 $ 264,815 $ 264,815 Required 1. Prepare the income statement and statement of owner's equity for the year ended June 30, 2020, and the classified balance sheet on that date. Use the account format for the balance sheet. 2. Journalize the closing entries. 3. Compute Carmela Creations's current ratio and debt ratio at June 30, 2020. One year ago, the current ratio stood at 1.72 and the debt ratio was 1.27. Did Carmela Creations's ability to pay debts improve or deteriorate during the fiscal year? Revenue Expenses Expenses Total expenses Net income Next, prepare the statement of owner's equity by completing the heading, selecting the correct labels, and entering the corresponding amounts. Add: Less Now prepare the classified balance sheet in account format. Begin by completing the heading, and then choose the account names and amounts for assets, followed by liabilities and owner's equity. (Enter the property, plant, and equipment accounts in the order given. Abbreviations used: exp. = expense; build. = building; equip. = equipment.) Assets Liabilities Current assets Current liabilities: Total current assets Total current liabilities Requirement 2. Journalize the closing entries. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by closing out the revenue account. Journal Entry Date Accounts Debit Credit Jun. Close out the expense accounts. Journal Entry Close out the income summary account. Journal Entry Accounts Date Debit Credit Jun. Close out the withdrawal account. Journal Entry Date Accounts Debit Credit lun Requirement 3. Compute Carmela Creations's current ratio and debt ratio at June 30, 2020. One year ago, the current ratio stood at 1.72 and the debt ratio was 1.27. Did Carmela Creations's ability to pay debts improve or deteriorate during the fiscal year? (Round ratios to two decimal places.) The current ratio for Carmela Creations is During fiscal 2020, Carmela Creations's ability to pay current liabilities with current assets The debt ratio for Carmela Creations is During fiscal 2020, Carmela Creations's ability to pay liabilities
