The account balances of Wilson Towing Service at June 30, 2020, follow: $13,000 Service Revenue $12,000 Equipment Supplies Notes Payable 900 Accounts Receivable 6,000 Accounts Payable Wilson's Capital, June 1, 2020 Salary Expense 6,700 2,400 Rent Expense 550 4,950 Cash 2,900 2,700 Required: (i) Prepare the following: A. Trial Balance B. Income Statement C. Statement of Owners Equity D. Balance Sheet (ii) Evaluate the business performance by calculating Return on Assets, Debt Ratio, and Current Ratio, then state whether the results are favorable or unfavorable by comparing to the following industry averages: Ratio Industry Average ROA 45% Debt Ratio 30% Current Ratio 1.6x

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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 The account balances of Wilson Towing Service at June 30, 2020, follow: 

Equipment 

$13,000 

Service Revenue 

$12,000

Supplies 

900 

Accounts Receivable 

6,000

Notes Payable 

6,700 

Accounts Payable 

2,400

Rent Expense 

550 

Wilson’s Capital, June 1, 2020 

4,950

Cash 

2,900 

Salary Expense 

2,700



Required: 

(i) Prepare the following:  

  1. Trial Balance  
  2. Income Statement  
  3. Statement of Owners Equity  
  4. Balance Sheet 

(ii) Evaluate the business performance by calculating Return on Assets, Debt Ratio, and  Current Ratio, then state whether the results are favorable or unfavorable by comparing to  the following industry averages:

Ratio 

Industry Average

ROA 

45%

Debt Ratio 

30%

Current Ratio 

1.6x

 

The account balances of Wilson Towing Service at June 30, 2020, follow:
Equipment
$13,000 | Service Revenue
$12,000
Supplies
Notes Payable
Rent Expense
900
Accounts Receivable
6,000
Accounts Payable
Wilson's Capital, June 1, 2020
Salary Expense
6,700
2,400
550
4,950
Cash
2,900
2,700
Required:
(i) Prepare the following:
A. Trial Balance
B. Income Statement
C. Statement of Owners Equity
D. Balance Sheet
(ii) Evaluate the business performance by calculating Return on Assets, Debt Ratio, and
Current Ratio, then state whether the results are favorable or unfavorable by comparing to
the following industry averages:
Ratio
Industry Average
ROA
45%
Debt Ratio
30%
Current Ratio
1.6x
Transcribed Image Text:The account balances of Wilson Towing Service at June 30, 2020, follow: Equipment $13,000 | Service Revenue $12,000 Supplies Notes Payable Rent Expense 900 Accounts Receivable 6,000 Accounts Payable Wilson's Capital, June 1, 2020 Salary Expense 6,700 2,400 550 4,950 Cash 2,900 2,700 Required: (i) Prepare the following: A. Trial Balance B. Income Statement C. Statement of Owners Equity D. Balance Sheet (ii) Evaluate the business performance by calculating Return on Assets, Debt Ratio, and Current Ratio, then state whether the results are favorable or unfavorable by comparing to the following industry averages: Ratio Industry Average ROA 45% Debt Ratio 30% Current Ratio 1.6x
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