The adjusted trial balance of Boston Irrigation System at December 31, 2018, follows BOSTON IRRIGATION SYSTEM Adjusted Trial Balance December 31, 2018 0 Account Title Office Supplies Cash Debit Credit Accounts Receivable Prepaid Insurance Building Accumulated Depreciation—Building Equipment Accumulated Depreciation—Equipment Accounts Payable Interest Payable Salaries Payable Unearned Revenue Notes Payable (long-term) Common Stock Dividends Retained Earnings Service Revenue Insurance Expense Salaries Expense Supplies Expense Balance \( 11,800 \) 211,900 \( 211,900 28,000 \) 25,000 63,000 32,100 2,600 2,200 2,100 12,000 21,000 46,000 29,500 6,300 7,700 32,700 2,200 74,500 1,100 16,400 1,100 2,200 2,500 1,800 Interest Expense Depreciation Expense—Equipment Depreciation Expense—Building Tota June 30, 2018. : Requirements 1. Prepare the company’s income statement for the year ended December 31, 2018. 2. Prepare the company’s statement of retained earnings for the year ended December 31, 2018. 3. Prepare the company’s classified balance sheet in report form at December 31, 2018. 4. Journalize the closing entries for Boston Irrigation System. 5. Compute the company’s current ratio at December 31, 2018. At December 31, 2017, the current ratio was 2.3. Did the company’s ability to pay current debts improve or deteriorate, or did it remain the same?

Revenues

Service Revenue

$74,500

Expenses

Insurance Expense

$1,100

Salaries Expense

16,400

Supplies Expense

1,100

Interest Expense

2,200

Depreciation Expense—Building

2,500

Depreciation Expense—Equipment

1,800

Total Expenses

25,100

Net Income

$49,400

Retained Earnings, Beginning Balance

$21,000

Net Income for the year

49,400

70,400

Dividends

(2,200)

Retained Earnings, November 30, 2018

$68,200

Current Assets:

Cash

$11,800

Accounts Receivable

46,000

Office Supplies

29,500

Prepaid Insurance

6,300

Total Current Assets

$93,600

Property, Plant, and Equipment:

Building

$63,000

Less: Accumulated Depreciation- Building

(25,000)

38,000

Equipment

28,000

Less: Accumulated Depreciation- Equipment

(7,700)

20,300

Total Property, Plant, and Equipment:

58,300

Total Assets

$151,900

Current Liabilities:

Accounts Payable

32,100

Interest Payable

2,200

Salaries Payable

2,600

Unearned revenue

2,100

Total Current Liabilities:

$39,000

Long-term Liabilities

Notes Payable

32,700

Total Liabilities

71,700

Common Stock

12,000

Retained Earnings

68,200

Total Stockholders’ Equity

80,200

Total Liabilities and Stockholders’ Equity

$151,900

Date

Accounts and Explanation

Debit

Credit

Dec. 31

Service Revenue

$74,500

Income Summary

$74,500

To close revenue.

Dec. 31

Income Summary

$25,100

Insurance Expense

$1,100

Salaries Expense

$16,400

Supplies Expense

$1,100

Interest Expense

$2,200

Depreciation Expense—Equipment

$2,500

Depreciation Expense—Building

$1,800

To close expenses.

Dec. 31

Income Summary

$49,400

Retained Earnings

$49,400

To close Income Summary

Dec. 31

Retained Earnings

$21,000

Dividends

$21,000

To close Dividends