The unadjusted trial balance of Rock City Services, Inc., at January 31, 2017, does not balance. The list of accounts and their balances is given below. The trial balance needs to be prepared and adjusted before the financial statements at January 31, 2017, can be prepared. The manager of Rock City Services also needs to know the business's current ratio.

Cash$ 8,000

Accounts receivable4,200

Supplies800

Prepaid rent1,200

Land43,000

Accounts payable12,000

Salary payable0

Unearned service revenue700

Note payable, due in three years23,400

Common stock5,000

Retained earnings9,300

Service revenue9,100

Salary expense3,400

Rent expense0

Advertising expense900

Supplies expense0

Requirements

1. How much out of balance is the trial balance? Notes Payable (the only error) is understated.

2. Rock City Services needs to make the following adjustments at January 31:

a. Supplies of $400 were used during January.

b. The balance of prepaid rent was paid on January 1 and covers the entire calendar year of 2017. No adjustment was made on January 31.

c. At January 31, Rock City Services owed employees $1,000.

d. Unearned service revenue of $500 was earned during January.

Prepare a corrected, adjusted trial balance. Give Notes Payable its correct balance.

3. After the error is corrected and after these adjustments are made, compute the current ratio of Rock City Services, Inc. If your business had this current ratio, could you sleep at night?