e Salarikes Fispense is overstared by 700 E A 300 cash payme

e. Salarikes Fispense is overstared by $700 E A $300 cash paymene for advertisin e A 5.20 cash divklend was incorrecely journalized as $2,000 h. Service Revenue was understated by $4,100 g expense was neither journalized nor posted. L A 12-monrh insurance policy was posted as a $1,900 credit eo Prepaid Insurance. Cash was posted coreectly Prepare the corrected tral balance \"s of August 31, 2018 Journal entre·re not P2-MA Preparing financial statements from the trial balance and calculating Learning Objectives 4, S the debt ratio 2 Ending Rentained Earnings $11,788 The tnial balance as of July 31, 2018, for Sara Simon, Registe cred Dietician, is presented belou RA SIMON REGISTERED DIETICIAN Trial Balance July 31, 2018 Credit Debit 5 38,000 9,000 2,300 2,400 16,000 Accounts Receivable Office Supplies Prepaid Insurance Accounts Payable Unearned Revenue Notes Payable Common Stock Dividends Service Revenue $ 3,000 3,912 31,000 18,000 2,800 17,888 Salaries Expense Rent Expense Utilities Expense Total 1,700 1,100 Soo 73,800 $73,800 Requirements 1. Prepare the income statement for the month ended July 31, 2018. 2. Prepare the statement of retained earnings for the month ended July 31,2018. The beginning balance of retained earnings was $0. 3. Prepare the balance sheet as of July 31, 2018. 4. Calculate the debt ratio as of July 31, 2018.

Solution

SARA SIMON REGISTERED DIETICIAN INCOME STATEMENT For the Month Ended July 31 2018 Service Revenue 17888 Less Expense Salaeries Expense 1700 Rent Expense 1100 Utilitie Expense 500 3300 Net Income 14588 Statement of Retained Earnnings Reatained Earnnings At the beginning 0 Add Net Income 14588 Less Dividend 2800 Retained Earnnings At the End of the Period 11788 SARA SIMON REGISTERED DIETICIAN BalanceSheet For the Month Ended July 31 2018 Assets Current Assets Cash 38000 Account Receivable 9000 Office Supplies 2300 Prepaid Insurance 2400 Total Current Asset 51700 Equipment 16000 Total Assets 67700 Shareholder Equity and Liabilities Current Liabilities Account Payable 3000 Unearned Revenue 3912 Note Payable 31000 Total Current Liabilitie 37912 Shareholder Equity Common Stock 18000 Retained Earnnings 11788 Total Shareholder Equity 29788 Total Shareholder Equity and Liabilities 67700 Debt Ratio =Debt/Total Asset =37912/67700 56.00%