1. Using the trial balance below, prepare (1) an income statement, (2) a statement of retained earnings, and (3) a balance sheet in good form, that is, the balance sheet should be classified by current and noncurrent classifications.

You are encouraged, but not required, to use a spreadsheet to prepare these financial statements. You may submit #1 as a separate (spreadsheet) document or copy & paste it into this Word document as a schedule at the end of this document.

ABC Company
Trial Balance
June 30, 2020
	debit		credit
Cash	132,560
Accounts receivable	675
Prepaid Insurance	500
Equipment	2,400
Accounts payable			650
Unearned revenue			3,000
Common stock			130,000
Retained earnings			-
Dividends	4,000
Revenues			16,925
Rent expense	6,000
Salaries expense	1,600
Advertising expense	1,150
Utilities expense	890
Internet & website expense	800
	150,575		150,575

2. Using the data from No. 1 prepare the following ratios:

1. Return on Assets

2. Debt Ratio

3. Describe why a potential investor in a company and a potential creditor (bank) would find the return on assets ratio useful.

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