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Answer #1
Income Statement
Revenue
Service Revenue $            75,000
Total Revenues $        75,000
Expenses
Salaries expense $            15,700
Interest Expense $              2,400
Depreciation expense - Building $              2,100
Depreciation expense - Equipment $              2,200
Insurance Expense $              1,200
Supplies Expense $              1,200
Total Expenses $        24,800
Net Income $        50,200
Retained Earnings Statement
Retained Earnings, January 1, 2018 $            13,000
Add : Net Income $            50,200
$            63,200
Less : Dividend $              2,600
Retained Earnings, December 31, 2018 $           60,600
Balance Sheet
Assets
Current Assets
Cash $            15,600
Accounts Receivable $            49,200
Prepaid Insurance $              6,100
Office Supplies $              2,600
Total Current Assets $        73,500
Property, Plant & Equipment
Building $            55,000
Accumulated Depreciation - Building $          -24,500
Book Value - Building $            30,500
Equipment $            20,000
Accumulated Depreciation - Equipment $            -7,000
Book Value - Equipment $            13,000
Property, Plant & Equipment $        43,500
Total Assets $     1,17,000
Liabilities & Stockholder's Equity
Current Liabilities
Accounts Payable $            27,600
Interest Payable $              2,400
Salaries Payable $              3,800
Unearned Revenue $              1,200
Total Current Liabilities $        35,000
Non Current Liabilities
Notes Payable $           2,400
Total Liabilities $        37,400
Stockholder's Equity
Common Stock $            19,000
Retained Earnings $            60,600
Total Stockholder's Equity $        79,600
Total Liabilities & Stockholder's Equity $     1,17,000
Account Titles Debit Credit
Service Revenue $            75,000
Income Summary $        75,000
(Revenue transferred to temporary account)
Income Summary $            24,800
Salaries expense $        15,700
Interest Expense $           2,400
Depreciation expense - Building $           2,100
Depreciation expense - Equipment $           2,200
Insurance Expense $           1,200
Supplies Expense $           1,200
(Expenses transferred to temporary account)
Income Summary $            50,200
Retained Earnings $        50,200
(Balance of Income Summary a/c i.e. net income transferred to retained earnings)
Retained Earnings $              2,600
Dividend $           2,600
(TO close dividend account)

Current Ratio = Current Assets / Current Liabilities
= $73500/35000 = 2.1

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