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.

Required:
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.

Trial Balance, December 31,2015 Before After Adjusting Entries Adjustments Adjusting Entries Debit Credit Debt CreitDbitCredit 13,500 Items a. Cash b. Accounts receivable c. Prepaid insurance d. Equipment e. Accumulated depreciation, 13,500 1,820 720 168,280 850 168,280 42,100 equipment f Income taxes payable g. Common stock and 48,100 1,380 additional paid-in capital h. Retained earnings, 112,000 112,000 January 1, 2015 i. Service revenue j. Salary expense k. Depreciation expense 19,600 64.400 19,600 66,220 55,470 55,470 6,000 130 1,380 Insurance expense m. Income tax expense 238,100 238,100 247,300247,300