Chapter 2, Problem P2.41CP

To determine

Journal Entry:

Journal entry is a medium of recording the business transactions carried during a particular accounting period.

T-Accounts:

T-Accounts are the ledger accounts which uses dual entry bookkeeping. It is informal term based on the appearance of the ledgers. The debits are disclosed on the left side and credits are disclosed on the right side of the ledger.

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 in the overall capital of the company.

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. Journalizing the transactions for the month of December.

2. Prepare a T-account for each of the accounts.

3. Posting the journal entries to the T-accounts and computing accounts balances.

4. Preparation trial balance as on December 31, 2016.

5. Prepare income statement of Daniels consulting for the month ended December 31, 2016.

6. Prepare the statement of owner’s equity as on December 31, 2016.

7. Prepare the balance sheet as of December 31, 2016.

8. Computation of debt ratio of Daniels consulting for the month.