| Required
1. Prepare the income statement and the statement of owner’s equity for the calendar-year 2005, and
the classified balance sheet at December 31, 2005.
2. Prepare the necessary closing entries at December 31, 2005.
3. Use the information in the financial statements to compute these ratios: (a) return on assets (total
assets at December 31, 2004, was $200,000), (b) debt ratio, (c) profit margin ratio (use total revenues
as the denominator), and (d) current ratio.
Chapter 4 Completing the Accounting Cycle 165
Check (1) Total assets (12/31/2005),
$178,100; Net income, $13,100 | 
Linear Mode
