Question

Credit Balsamo Corporation Adjusted Trial Balance July 31, 2018 Account Debit Cash 12,400 Accounts receivable 19,500 Supplies 3,000 Prepaid rent 1,400 Equipment 36,800 Accumulated depreciation equipment Accounts payable Interest payable Unearned service revenue Income tax payable Note payable Common stock Retained earnings Dividends 6,000 Service revenue Depreciation expense-equipment 1,200 Salary expense 40,500 Rent expense 11,000 Interest expense 3,100 Insurance expense 3,600 Supplies expense 2,100 6,800 Income tax expense 4,800 8,600 300 300 2,200 18,200 16,000 2,900 94,100

Options for last line are (Compliance/incompliance)

Answer 1

Income Statement for the year ended 31 july 2018
Income
Service revenue				94,100
Expenses
Salaries		40500
Rent		11000
Depreciation		1200
Interest		3100
Insurance		3600
Supplies		2100		-61500
Income before tax				32,600
Income tax expense				-6800
Income after Tax				25,800
Statement of Retained earnings for year ended July 31 2018
Opening Balance			2900
Add: Current year Earnings			25800
			28700
Statement of balance sheet as on July 31 2018
Assets		Amount		Liabilities		Amount
Equipment(36800-4800)		32000
Prepaid rent		1400		Income tax payable		2200
Accounts receivable		19500		Note payable		18200
Supplies		3000		Accounts payable		8600
Cash		12400		Interest payable		300
Dividends		6000		Unearned service revenue		300
				Shareholder's equity
				Common stock	16000
				Retained earnings	28700	44700
		74300				74300
Requirement 2
Debt	29600
Equity	44700
Debt equity ratio is equal to	Debt/Equity
	29600/44700
	0.662192
	66.21%
Company crossed it's target of 0.50
Company is not in compliance with debt restriction