The accounting records of Fabiano Distribution show the following assets and liabilities as of December 31, 2010 and 2011.

Late in December 2011, the business purchased a small office building and land for $225,000. It paid $120,000 cash toward the purchase and a $105,000 note payable was signed for the balance. Mr. Fabiano had to invest $35,000 cash in the business to enable it to pay the $120,000 cash. Mr. Fabiano withdraws $3,000 cash per month for personal use.

Required
1. Prepare balance sheets for the business as of December 31, 2010 and 2011.
2. By comparing equity amounts from the balance sheets and using the additional information presented in this problem, prepare a calculation to show how much net income was earned by the business during 2011.
3. Compute the 2011 year-end debt ratio for thebusiness.

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December 31 2010 2011 Cash.. Accounts receivable Office supplies Office equipment..38,000 147,000 Trucks Building- Land 52,500 18,750 28,500 22350 3.300 4,500 ....54.000 54,000 0 180,000 0 45,000 Note payable 0 105.000