The adjusted trial balance of

NotE

Design at

December

31,

2020,

the end of the company's fiscal year, is provided.

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Required

1.	Prepare NotE Design's income statement and statement of owner's equity for the year ended December 31, 2020, and the classified balance sheet on that date. Use the account format for the balance sheet.
2.	Journalize the closing entries. Include explanations.
3.	Compute NotE Design's current ratio and debt ratio at December 31, 2020. One year ago, the current ratio stood at 1.21 and the debt ratio was 0.55. Did NotE Design's ability to pay debts improve or deteriorate during fiscal 2020?

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Part 1

Requirement 1. Prepare

NotE

Design's income statement and statement of owner's equity for the year ended

December

31,

2020,

and the classified balance sheet on that date. Use the account format for the balance sheet.

We will begin with the income statement. Start by completing the heading, then choose the accounts, and then enter the corresponding amounts.

Adjusted Trial Balance Cash Accounts receivable Supplies Prepaid insurance Equipment Accumulated amortization-equipment Building Accumulated amortization-building Land Accounts payable Interest payable Wages payable Unearned service revenue Note payable, long-term L. Ramsey, capital L. Ramsey, withdrawals Service revenue Amortization expense-equipment Amortization expense-building Wages expense Insurance expense Interest expense Utilities expense Supplies expense Total NotE Design Adjusted Trial Balance December 31, 2020 Account $ Debit 3,740 87,480 7,380 4,580 127,860 148,660 40,000 Credit $ 56,860 36,520 41,100 5,560 2,660 7,320 139,800 128,400 197,100 56,000 13,800 7,420 66,620 10,740 17,340 9,940 13,760 $ 615,320 $ 615,320 06/15/22, 2:35 PM Revenue: Expenses: NOTE Design Income Statement For the Year Ended December 31, 2020 Service revenue Amortization expense-building Amortization expense-equipment Wages expense Insurance expense Utilities expense Supplies expense Interest expense Total expenses Net income 7,420 13,800 66,620 10,740 9,940 13,760 17,340 $ 197,100 139,620 $ 57,480 Next, prepare the statement of owner's equity by completing the heading, selecting the correct labels, and entering the corresponding amounts. NotE Design Statement of Owner's Equity For the Year Ended December 31, 2020 L. Ramsey, capital, January 1, 2020 $ 128,400 Add: Net income 57,480 185,880 Less: Withdrawals 56,000 $ 129,880 L. Ramsey, capital, December 31, 2020 Our final statement is the balance sheet. 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. Abbreviation used: Accum. amort. = Accumulated amortization; build. = building; equip = equipment.) NotE Design Balance Sheet December 31, 2020 Assets Current assets: Building Prepaid insurance Equipment Land Total current assets Property, plant and equipment: Assets Current assets: Building Prepaid insurance Equipment Land Total current assets Property, plant and equipment: NotE Design Balance Sheet December 31, 2020