The Following Unadjusted Trail Balance Is Presented for MEMBA, Inc. As of December 31, 2017

Name______Section______

MEMBA 19, Inc.

The following unadjusted trail balance is presented for MEMBA, Inc. as of December 31, 2017.

Unadjusted Trial Balance

Account / Debit / Credit
Cash
Accounts receivable
Interest receivable
Rent receivable
Merchandise inventory
Prepaid rent
Supplies
Plant & equipment
Accumulated depreciation
Investment in government bonds
Accounts payable
Interest payable
Wages payable
Unearned revenue
Notes payable
Common stock
Retained earnings
Sales
Interest Income
Rent Income
Cost of goods sold
Advertising expense
Depreciation expense
Insurance expense
Interest expense
Rent expense
Supplies expense
Wages expense
Dividends / 100,000
228,000
350,000
24,000
75,000
500,000
100,000
550,000
30,000
49,000
146,000
2,000 / 149,000
104,000
20,000
20,000
325,000
401,000
1,135,000
$2,154,000 / $2,154,000

MEMBA 19, Inc. used the following information to prepare adjusting journal entries on December 31, 2017.

a.  Depreciation expense in the amount of $40,000 is recorded each year.

b.  A physical count of the merchandise inventory indicates that $200,000 is on hand at the end of the year.

c.  The company made a $24,000 rent payment on May 1, which covers the subsequent twelve-month period.

d.  A physical count indicates that $50,000 of supplies are on hand at the end of the year.

e.  The company will pay employees $12,000 for wages earned for the thirty-day period ending January 15, 2018. Assume that the $12,000 is earned at a rate of $400 per day.

f.  On October 1, 2017, the company began renting office space to a small insurance agency. The contract calls for rent receipts of $3,000 per month. No rent has been received as of the end of the year.

g.  The $20,000 note payable was issued on September 1, 2017. It matures on January 1, 2020 and has a stated annual interest rate of 3%. [Compute by months, not days]

h.  As of the end of the period, $15,000 of the unearned sales has been earned.

i.  Unrecorded interest on US government bonds is $1,000.

Required:

1. Prepare the adjusting journal entries for MEMBA 19, Inc. for 2017.

a.
b.
c.
d.
e.
f.
g.
h.
i.

2. Prepare the closing journal entries.

3. Prepare the income statement for 2017.

4. Prepare the balance sheet as of December 31, 2017.

5. Compute the following ratios for 2017:

a.  Current ratio

b.  Debt-to-equity ratio

c.  Profit margin

Show work area for T accounts and Adjusted Trial Balance: