Question

Bal., as shown in Exhibit 4-10 (page 18/). DUUDI balance. 2. Prepare the post-closing trial balance. 3. Prepare the classified balance sheet at December 31, 2017 Problem 4-6B The adjusted trial balance of Musquem Golf School at April 30, 2017, the end of the com- pany's fiscal year, is shown on the next page. Preparing financial statements from an adjusted trial balance, journalizing adjusting and closing entries, evaluating a business Required 1. Prepare Musquem Golf School's income statement and statement of owner's equity for the year ended April 30, 2017, and the classified balance sheet on that date. Use the account format for the balance sheet. 2. Journalize the closing entries. Include explanations. 3. Compute Musquem Golf School's current ratio and debt ratio at April 30, 2017. One year ago, the current ratio stood at 1.21, and the debt ratio was 0.82. Did Musquem Golf School's ability to pay debts improve or deteriorate during fiscal 2017? 232 Part 1 The Basic Structure of Accounting

Answer 1

Musquem Golf School 197100 13800 Statement of Income For the period ending 30.4.2017 Teaching Revenue Less: Amortization Expense - Equip. Amortization Expense - Build. Wages Expense Insurance Expense Interest Expense Utilities Expense Supplies Expense Net Income 7420 66620 10740 17340 9940 13760 139620 57480 Statement of Owner's Equity For the period ending 30.4.2017 J. Wilson, Capital (beg.) Net Income 128400 57480 185880 -56000 129880 J. Wilson, withdrawals J. Wilson, Capital 30.4.2017

Balance sheet As at 30.4.2017 Assets Current Assets Amounts in $ Amounts in $ Cash Amounts in $ Amounts in $ Liabilities Current Liabilities 3740 Accounts Payable 87480 Interest Payable 7380 Wages Payable 4580 103180 Unearned Teaching Revenue Accounts Receivable Supplies Prepaid Insurance 41100 5560 2660 7320 56640 Non Current Liabilities 40000 Notes Payable, Long Term 139800 Non Current Assets Land Equipment Accum. Amort.- Equip. Building Accum. Amort.- Build Total Assets 127860 -56860 148660 -36520 71000 Owner's Equity 112140 J. Wilson, Capital 326320 Total Liabilities & Equity 129880 326320 Current Ratio = Current Assets / Current Liabilities = 103180/56640 = 1.82 Debt Ratio = Total Liabilities/Total Assets = (56640 + 139800) / 326320 = 196440 / 326320 = 0.602 Current ratio has improved which implies company's ability to pay off Current Liabilities has improved Lower debt ratio implies company is less risky now considering reduction in debts.

Credit in $ Closing Enteries Date Particulars Debit in $ 30.4.2017 Income Summary a/c Dr. 139620 To Amortization Expense - Equip. To Amortization Expense - Build. To Wages Expense To Insurance Expense To Interest Expense To Utilities Expense To Supplies Expense (Expense accounts closed) 13800 7420 66620 10740 17340 9940 13760 197100 30.4.2017 Teaching Revenue a/c Dr. To Income Summary (Revenue accounts closed) 197100 57480 30.4.2017 Income Summary a/c Dr. To J. Wilson, Capital (Profits transferred) 57480 56000 30.4.2017 J. Wilson, Capital a/c Dr. To J. Wilson, withdrawals (Withdrawals charged to Capital) 56000