Chapter 2, Problem 5APSA

To determine

Concept Introduction

Trial Balance: The Trial Balance is a list of closing balance of all ledger accounts on a particular date. It is a summary of all T-Account balances in the ledger and the total of debit and credit balances should always match.

Balance Sheet: The balance sheet is a financial statement of a company that summarizes the company’s assets, liabilities and owner’s equity at a particular point of time. The balance sheet is bound by the following rule.

Assets = Liabilities + Shareholders' Equity

Net Income: Net income or net profit is the earing available for the owner of business after deducting all the expenses. It is the difference of the total revenue and total expenses. When total expenses are more than the total revenue, it is called net loss.

Debt Ratio: Debt ratio is a financial ratio that calculates the leverage of the company. It is the ratio of the total debt to the total assets and is represented in percentage terms. The debt ratio explains the amount of debt on the balance sheet as compared to assets on the balance sheet. The higher the ratio, the higher is the risk associated with the company.

1.

To Prepare: The Balance sheet for Nettle Distribution from the ledger balance given.

To determine

To Compute: The net income for 2017.

To determine

To Compute: The 2017 year-end debt ratio.