The adjusted trial balance of Balti Design at June 30, 2017, the end of the company's fiscal year, appears below.

Required

1. Prepare the income statement and statement of owner's equity for the year ended June 30, 2017, and the classified balance sheet on that date. Use the account format for the balance sheet.

2. Journalize the closing entries.

3. Compute Balti Design's current ratio and debt ratio at June 30, 2017. One year ago the current ratio stood at 1.01 and the debt ratio was 0.71. Did Balti Design's ability to pay debts improve or deteriorate during the fiscal year?

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BALTI DESIGN Adjusted Trial Balance June 30, 2017 Cash Accounts receivable Supplies Prepaid insurance $12,610 15,882 18,774 1,920 33,480 68,940 Accumulated amortization-building 18,000 Unearned service revenue Notes payable, long-term A. Kapoor, withdrawals Amortization expense equipment Amortization expense building Supplies expense $232,924