The adjusted trial balance and the income statement amounts from the August worksheet of Brian O€™Brion Dance Studio Company follow:

Requirements
1. Prepare the classified balance sheet of Brian O€™Brion Dance Studio Company at August 31, 2012. Use the report form. You must compute the ending balance of Retained earnings.
2. Compute O€™Brion€™s current ratio and debt ratio at August 31, 2012. One year ago, the current ratio was 1.49 and the debt ratio was 0.29. Indicate whether O€™Brion€™s ability to pay current and total debts has improved, deteriorated, or remained the same during the currentyear.

BRIAN O'BRION DANCE STUDIO COMPANY Partial Worksheet Month Ended August 31, 2012 Adjusted Trial Balance Debit Credit Account Cash $15,800 Supplies Prepaid rent Equipment Accumulated depreciation Accounts payable Salary payable 2,000 900 49,000 $ 5,500 4,500 500 Unearned service revenue 5,100 Long-term note payable Common stock 4,400 12,800 Retained earnings 23,700 Dividends 1,100 Service revenue 18,100 Salary expense 3,000 Rent expense Depreciation expense 1,500 300 Supplies expense Utilities expense 400 600 Total $74,600 $74,600