Problem - J. Giovanni invested $30,000 cash in the business during year 2011 (the December 31, 2010, credit balance of the J. Giovanni, Capital account was $ 61,800).
GIOVANNI COMPANY Adjusted Trial Balance December 31, 2011
No. Account Title Debit Credit
101 Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,400
104 Short- term investments . . . . . . . . . . . . . . . . . . . . 10,200
126 Supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,600
128 Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 800
167 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
168 Accumulated depreciation- Equipment . . . . . . . . . $3,000
173 Building . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
174 Accumulated depreciation- Building . . . . . . . . . 9,000
183 Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,500
201 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . 2,500
203 Interest payable . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400
208 Rent payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200
210 Wages payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,180
213 Property taxes payable . . . . . . . . . . . . . . . . . . . . . . 2,330
233 Unearned professional fees . . . . . . . . . . . . . . . . . . 650
251 Long- term notes payable . . . . . . . . . . . . . . . . . . . . 32,000
301 J. Giovanni, Capital . . . . . . . . . . . . . . . . . . . . . . . . . 91,800
302 J. Giovanni, Withdrawals . . . . . . . . . . . . . . . . . . . . 14,500
401 Professional fees earned . . . . . . . . . . . . . . . . . . . . 57,000
406 Rent earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,600
407 Dividends earned . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500
409 Interest earned . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,120
606 Depreciation expense- Building . . . . . . . . . . . . . . 2,000
612 Depreciation expense- Equipment . . . . . . . . . . . . 1,000
623 Wages expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500
633 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,200
637 Insurance expense . . . . . . . . . . . . . . . . . . . . . . . . . 1,425
640 Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800
652 Supplies expense . . . . . . . . . . . . . . . . . . . . . . . . . . 900
682 Postage expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
683 Property taxes expense . . . . . . . . . . . . . . . . . . . . . 3,825
684 Repairs expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,579
688 Telephone expense . . . . . . . . . . . . . . . . . . . . . . . . 921
690 Utilities expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,820
Totals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $210,280 $210,280
Required:
1. Prepare the income statement and the statement of owner's equity for the calendar year 2011 and the classified balance sheet at December 31, 2011.
2. Prepare the necessary closing entries at December 31, 2011.
3. Use the information in the financial statements to calculate these ratios: (a) return on assets ( total assets at December 31, 2010, were $ 130,000), (b) debt ratio, (c) profit margin ratio ( use total revenues as the denominator), and (d) current ratio.