Liner Company has the following adjusted trial balance at December 31, 2014. No dividends were declared; however, 400 additional shares were issued during the year for $ 2,000:

Required:
1. Prepare a statement of earnings in good form for 2014. Include earnings per share.
2. Prepare closing entries and post the effects to the appropriate ledger accounts.
3. Prepare a statement of financial position in good form at December 31, 2014.
4. Compute Liner Company€™s net profit margin ratio and return on equity for the year. What do these ratios mean?

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Debit Credit Cash Trade receivables Interest receivable Prepayments Notes receivable Equipment Accumulated depreciation Trade payables Accrued liabilities Income taxes payable Deferred rent revenue Contributed capital (500 shares) Retained eamings Sales revenue Interest revenue Rent revenue Wages expense Depreciation expense Utilities expense Insurance expense Rent expense Income tax expense 2,700 3,000 120 600 3,000 12,000 2,000 1,600 3,820 2,900 600 2,400 1,000 45,000 120 300 20,600 2,000 1,220 600 10,000 3,900 $59,740 Total $59,740