Question

I need help finding the add:net income and the debt ratio please help

Required information Problem 2-5A Computing net income from equity analysis, preparing a balance sheet, and computing the debt ratio LO C2, A1, A2, P3 The following information applies to the questions displayed below.) The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2016 and 2017. December 31 Cash Accounts receivable Office supplies Office equipment Trucks Building Land Accounts payable Note payable 2016 $ 64,300 26,240 3,160 44,000 148,000 2017 $ 15,640 19, 100 1,960 44,000 157,000 80,000 60,000 33,500 40,000 3,500 0 Problem 2-5A Part 1 Required: 1. Prepare balance sheets for the business as of December 31, 2016 and 2017. (Hint: Report only total equity on the balance sheet and remember that total equity equals the difference between assets and liabilities.) Answer is complete and correct. NETTLE DISTRIBUTION

Answer 1

Answer:

Requirement 2:

Equity, December 31,2016	$282,200
Add: Owner's Investment	$35,000
Add: Net income	$6,000
	$323,200
Less: Dividends	($19,000)
Equity, December 31,2017	$304,200

Requirement 3:

Total Liabilities	/	Total Assets	=	Debt ratio
$73,500	/	$377,700	=	0.19459

.

Calculations:

i. Calculation of Equity At Dec 31,2016 & Dec.31 2017:

	2016	2017
Assets:
Cash	$64,300	$15,640
Accounts receivable	$26,240	$19,100
Office supplies	$3,160	$1,960
Office equipment	$44,000	$44,000
Trucks	$148,000	$157,000
Buildings	$0	$80,000
Land	$0	$60,000
Total Assets (i)	$285,700	$377,700
Liabilities
Accounts payable	$3,500	$33,500
Notes payable	$0	$40,000
Total Liabilities (ii)	$3,500	$73,500
Equity (i-ii)	$282,200	$304,200

ii. Calculation of net income:

Equity, December 31,2017	$304,200
Add: Dividends	$19,000
Less: Owner's investment	($35,000)
Less: Equity, December 31,2016	($282,200)
Net income	$6,000