The following is an alphabetical listing of the balance sheet accounts and account balances of the Blazer Company on December 31, 2007:

Additional information:
1. The company uses a control account for property and equipment, accumulated depreciation, and for long-term liabilities.
The latter account is listed at its book value.
2. The straight-line method is used to depreciate property and equipment based upon cost, estimated residual value, and estimated life. The costs of the assets in this account are: land $29,500, buildings $164,600, store fixtures $72,600, and office equipment $30,000.
3. The accumulated depreciation breakdown is as follows: buildings $54,600, store fixtures $37,400, and office equipment $17,300.
4. The long-term debt includes 12%, $36,000 face value bonds that mature on December 31, 2012 and have an unamortized bond discount of $1,000; 11%, $48,000 face value bonds that mature on December 31, 2016, have a premium on bonds payable of $1,800, and whose retirement is being funded by a bond sinking fund; and a 13% note payable that has a face value of $6,200 and matures on January 1, 2010.
5. The noninterest-bearing note receivable matures on June 1, 2008.
6. Inventory is listed at lower of cost or market; cost is determined on the basis of average cost.
7. The investment in affiliate is carried at cost. The company has guaranteed the interest on 12%, $50,000, 15-year bonds issued by this affiliate, the Jay Company.
8. Common stock has a $10 par value per share, 10,000 shares are authorized, and 1,000 shares were issued during 2007 at a price of $13 per share, resulting in 8,000 shares issued at year-end.
9. Preferred stock has a $50 par value per share, 2,000 shares are authorized, and 140 shares were issued during 2007 at a price of $55 per share, resulting in 640 shares issued at year-end.
10. On January 15, 2008, before the December 31, 2007 balance sheet was issued, a building with a cost of $20,000 and a book value of $7,000 was totally destroyed. Insurance proceeds will amount to only $5,000.
11. Net income and dividends paid during the year were $50,500 and $21,000, respectively.

Required
1. Prepare the December 31, 2007 balance sheet (including appropriate parenthetical notations) of the Blazer Company.
2. Prepare a statement of changes in stockholders' equity for 2007. (Hint: Work back from the ending account balances.)
3. Prepare notes that itemize the balance sheet control accounts and those necessary to disclose any company accounting policies, contingent liabilities, and subsequent events.
4. Compute the debt ratio at the end of 2007. What is your evaluation of this ratio if it was 39% at the end of2006?

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s 44,200 Income taxes payable counts Accounts receivable Accumulated depreciation Additional paid-in capital on common stock Additional paid-in capital on preferred stock Allowance for doubtful accounts Bond sinking fund Cash Common stock S 19,700 85,300 30,000 91,000 6,800 17,000 32,000 296,700 84,600 37,100 Inventory 109,300 Investment in affiliate 20,000 Long-term liabilities (book value) Miscellaneous current payables 3,200 1,600 Notes receivable 12,500 Preferred stock 13,800 80,000 Retained earnings