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The unadjusted trial balance for JKF Inc is provided below. A. Use along with the notes provided below to prepare a multi-step income statement, a statement of stockholders equity and a classified balance sheet. Prepare journal entries to show the accounting treatment for each of the adjustments below. JKF Inc Unadjusted Trial Balance For the year ended 31st Dec 2020 Credit Cash Accounts Receivable Inventory Prepaid Insurance Equipment Accumulated Depreciation Equipment Debit 200,000 200,000 250,000 100,000 1,200,000 400,000 Land 100,000 Notes Payable (Long term) Accounts payable Unearned Service Revenue Owner's Capital Retained carings Sales Revenue Cost of Goods Sold Selling Expenses Admin Expenses Interest revenues Loss on sale of fixed assets 100,000 100,000 50,000 500,000 300,000 1,400,000 600,000 150,000 100,000 100,000 50,000 2,950,000 2,950,000 The following adjustments were provided 1. Fees of $25,000, received in advance during the year were erroneously recorded in Sales revenue. 2. 4. 5. $50,000 recorded as unearned service was earned during the year. Prepaid Insurance expired during the year $30,000. (Admin Expense) Equipment is expected to last for 5 years. Salvage value is $200,000. (Depreciation in COGS) Office salaries and wages earned but unrecorded and unpaid December 31, 2020, $20,000. (Admin Expense) A physical count of inventory on 12/31/2020 shows that $100,000 worth is remaining. Provide a bad debt allowance of $ 50,000. (Selling Exp) Provide income taxes of 20% of income before taxes Dividends of 50,000 was declared (but not paid) for the year. 6. 7. 8. 9. B. For JKF, compute the following ratios (use the definitions provided in the exam). 1 u WN Operating Margin (Inc from Operations / Net Sales) Sales Margin (NI / Net Sales) Working Capital (CA - CL) Current Ratio (CA/CL) Debt to Equity ratio (Tot Liabilities / Tot Equity) 4 5 C. Comment on the health of the firm based on the ratios you computed above (1 paragraph. This may be typed)

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