Kim Torge and Ben Guiliano began operations of their furniture repair shop (New Again Furniture.

Inc.) on January 1. 2002. The annual reporting period ends December 31. The trial balance on January 1. 2003. was as follows (the amounts are rounded to thousands of dollars to simplify):

Transactions during 2003 (summarized in thousands of dollars) follow:
a.
b.
c.
d.
e.
/
8-
h.
Borrowed S20 cash on July 1 . 2003. signing a 10 percent note payable.
Purchased equipment for SI 8 cash on July 1. 2003.

Sold 5.000 additional shares of capital stock for $1 cash per share (show dollars in thousands:

numbers of shares and price per share are as presented).

Earned revenues for 2003. S65. including $9 on credit.

Recognized remaining expenses for 2003. S35. including S7 on credit.

Purchased additional small tools. S3 cash.

Collected accounts receivable. $8.

Paid accounts payable. S 1 1 Purchased on account supplies for future use. S10.

Received a $3 deposit on work to start January 15. 2004.

Declared and paid a cash dividend. S10.

Data for adjusting entries:

/. Supplies of $4 and small tools of $8 were counted on December 31. 2003 (debit Remaining Expenses).

m. Depreciation for 2003. $2.

n. Interest accrued on notes payable (to be computed).

o. Wages earned since the December 24 payroll not yet paid. S3.

p. Income tax expense was S4. payable in 2004.

Required: 1. Set up T-accounts for the accounts on the trial balance and enter beginning balances. 2. Record transactions

(a) through (A) and post them to the T-accounts. 3. Record and post the adjusting entries (/) through (p). 4. Prepare an income statement (including earnings per share), statement of stockholders" equity, balance sheet, and the statement of cash flows. 5. Record and post the closing entries.

Prepare a post-closing trial balance.

Compute the following ratios for 2003:

a. Financial leverage

b. Total asset turnover

c. Net profit margin

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Account No. Account Titles 01 Cash 02 Accounts receivable 03 04 05 06 Supplies Small tools Equipment Accumulated depreciation (equipment) Remaining assets (not detailed to simplify) Accounts payable Notes payable Debit Credit 5426 07 12 13 Wages payable 14 Interest payable 15 16 Income taxes payable Unearned revenue 21 Contributed capital (15.000 shares) 15