Chapter 2, Problem P2.34APGA

To determine

Income Statement:

The statement which shows the revenues earned and expenses incurred during a particular year is called Income statement.

Statement of Owner’s Equity:

Statement of owner’s equity is concerned with portion of owner’s equity.

Balance Sheet:

A financial statement which shows the financial position of a company during specified accounting period is called a balance sheet.

Debt Ratio:

Debt ratio is financial ratio which measures the total amount of debt utilized in financing the assets of a company. It is computed by dividing the total debt by the total assets of a company. It indicates a company’s financial leverage and flexibility.

To determine:

1. Preparation of income statement for the month ended July 31, 2017.

2. Prepare the statement of owner’s equity for the month ended July 31, 2017.

3. Prepare the balance sheet as on July 31, 2017.

4. Computation of debt ratio as of July 31, 2017.