The accounting records of Nettle Distribution show the following assets and liabilities as of December 31, 2016 and 2017.
December 31 2016 2017
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
Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 80,000
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0 60,000
Accounts payable . . . . . . . . . . . . . . . . .3,500 33,500
Note payable . . . . . . . . . . . . . . . . . . . . . . . .0 40,000
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.)
2. Compute net income for 2017 by comparing total equity amounts for these two years and using the following information: During 2017, the owner invested $35,000 additional cash in the business and withdrew $19,000 cash for personal use. 3. Compute the 2017 year-end debt ratio (in percent and rounded to one decimal).
Answers: 1
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