Question

1. Prepare the company's income statement for the year ended December 31, 2018

 2. Prepare the company's statement of retained earnings for the year ended December 31, 2018

 3. Prepare the company's classified balance sheet in report form at December 31, 2018

 4. Journalize the closing entries for Bennett Irrigation System.

 5. Compute the company's current ratio at December 31, 2018. At December 31, 2017, the current ratio was 2.6. Did the company's ability to pay debts improve or deteriorate, or did it remain the same? 

Answer 1

Requirement 5:

Current Assets	/	Current liabilities	=	Current ratio
$79,200	/	$33,000	=	2.4

Since the current ratio was 2.6 one year ago, Bennett's ability to pay its current liabilities has decreased

Calculations:

Current Assets
Cash	$15,800
Accounts receivable	$49,200
Office supplies	$8,900
Prepaid insurance	$5,300
Total Current assets	$79,200
Current Liabilities
Accounts payable	$28,400
Interest payable	$400
Salaries payable	$2,900
Unearned revenue	$1,300
Total current liabilities	$33,000