Chapter 4, Problem P4.36BPGB

Preparing financial statements including a classified balance sheet in report form, preparing closing entries, and using the current ratio to evaluate a company

Learning Objectives 1, 3, 6
2. Ending Capital $73,200

The adjusted trial balance of Bradley Irrigation System at December 31, 2018, follows:

Requirements

1. Prepare the company's income statement for the year ended December 31, 2018.
2. Prepare the company's statement of owner's equity for the year ended December 31, 2018. Assume that there were no contributions made by the owner during the year.
3. Prepare the company's classified balance sheet in report format December 31, 2018.
4. Journalize the closing entries for Bradley Irrigation System.
5. Compute the company's current ratio at December 31, 2018. At December 31, 2017, the current ratio was 1.7. Did the company's ability to pay current debts improve or deteriorate, or did it remain the same?