Ramirez Company is completing the information processing cycle at its fiscal year-end, December 31, 2015. Following are the correct balances at December 31, 2015, for the accounts both before and after the adjusting entries for 2015.

1. Compare the amounts in the columns before and after the adjusting entries to reconstruct the adjusting entries made in 2015. Provide an explanation of each.
2. Compute the amount of net income assuming that it is based on the amounts (a) before adjusting entries and (b) after adjusting entries. Which net income amount is correct? Explain why.
3. Compute earnings per share, assuming that 3,000 shares of stock are outstanding all year.
4. Compute the total asset turnover ratio, assuming total assets at December 31, 2014, were $110,000. If the industry average is 0.49, what does this suggest to you about the company?
5. Record the closing entry at December 31,2015.

  • CreatedJuly 01, 2014
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