#5 Consider this simplified balance sheet for Geomorph Trading: Current assets $ 170 Current liabilities $ 95 Long-term assets 570 Long-term debt 245 Other liabilities 140 Equity 260 $ 740 $ 740 a. What is the company’s debt-equity ratio? (Round your answer to 2 decimal places.) b. What is the ratio of total long-term debt to total long-term capital? (Round your answer to 2 decimal places.) c. What is its net working capital? d. What is its current ratio? (Round your answer to 2 decimal places.) #6 Lever Age pays an 10% rate of interest on $10.50 million of outstanding debt with face value $10.5 million. The firm’s EBIT was $1.5 million. a. What is its times interest earned? (Round your answer to 2 decimal places.) b. If depreciation is $250,000, what is its cash coverage ratio? (Round your answer to 2 decimal places.) Chapter 3 - Instruction #1 The unadjusted trial balance for PS Music as of July 31, 20Y5 is as follows: PS Music Unadjusted Trial Balance July 31, 20Y5 Line Item Description Account No. Debit Balances Credit Balances Cash 11 9,945     Accounts Receivable 12 2,750     Supplies 14 1,020     Prepaid Insurance 15 2,700     Office Equipment 17 7,500     Accounts Payable 21 8,350     Unearned Revenue 23 7,200     Common Stock 31 9,000     Dividends 33 1,750     Fees Earned 41 16,200     Wages Expense 50 2,800     Office Rent Expense 51 2,550     Equipment Rent Expense 52 1,375     Utilities Expense 53 1,215     Music Expense 54 3,610     Advertising Expense 55 1,500     Supplies Expense 56 180     Miscellaneous Expense 59 1,855     40,750     40,750     Based on those balances and the additional data below, prepare adjusting journal entries. Include Posting References, using the account numbers in your spreadsheet. You will need the following additional accounts: Account # Account Name 18 Accumulated Depreciation-Office Equipment 22 Wages Payable 57 Insurance Expense 58 Depreciation Expense The data needed to determine adjustments are as follows: If an amount box does not require an entry, leave it blank. July 31:  During July, PS Music provided guest disc jockeys for KXMD for a total of 115 hours. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600, which PS Music has already received payment for. Any additional hours beyond 80 will be billed to KXMD at $40 per hour. Account Post. Ref. Debit Credit fill in the blank 2 fill in the blank 3 fill in the blank 4 fill in the blank 6 fill in the blank 7 fill in the blank 8 July 31:  Supplies on hand at July 31, $275. Account Post. Ref. Debit Credit fill in the blank 10 fill in the blank 11 fill in the blank 12 fill in the blank 14 fill in the blank 15 fill in the blank 16 July 31:  The balance of the prepaid insurance account relates to the following July 1, 20Y5 transaction: "Paid a premium of $2,700 for a comprehensive insurance policy covering liability, th ...

1. #5
Consider this simplified balance sheet for Geomorph Trading:
Current assets
$
170
Current liabilities
$
95
Long-term assets
570
Long-term debt
245
Other liabilities

2. 140
Equity
260
$
740
$
740
a. What is the company’s debt-equity ratio? (Round your answer
to 2 decimal places.)
b. What is the ratio of total long-term debt to total long-term
capital? (Round your answer to 2 decimal places.)
c. What is its net working capital?
d. What is its current ratio? (Round your answer to 2 decimal
places.)
#6
Lever Age pays an 10% rate of interest on $10.50 million of
outstanding debt with face value $10.5 million. The firm’s EBIT
was $1.5 million.

3. a. What is its times interest earned? (Round your answer to 2
decimal places.)
b. If depreciation is $250,000, what is its cash coverage
ratio? (Round your answer to 2 decimal places.)
Chapter 3 - Instruction #1
The unadjusted trial balance for PS Music as of July 31, 20Y5 is
as follows:
PS Music
Unadjusted Trial Balance
July 31, 20Y5
Line Item Description
Account
No.
Debit
Balances
Credit
Balances
Cash
11
9,945
Accounts Receivable
12
2,750
Supplies
14
1,020
Prepaid Insurance
15
2,700

4. Office Equipment
17
7,500
Accounts Payable
21
8,350
Unearned Revenue
23
7,200
Common Stock
31
9,000
Dividends
33
1,750
Fees Earned
41
16,200
Wages Expense
50
2,800
Office Rent Expense
51
2,550
Equipment Rent Expense
52
1,375

5. Utilities Expense
53
1,215
Music Expense
54
3,610
Advertising Expense
55
1,500
Supplies Expense
56
180
Miscellaneous Expense
59
1,855
40,750
40,750
Based on those balances and the additional data below, prepare
adjusting journal entries. Include Posting References, using the
account numbers in your spreadsheet. You will need the
following additional accounts:
Account #
Account Name
18
Accumulated Depreciation-Office Equipment
22
Wages Payable
57

6. Insurance Expense
58
Depreciation Expense
The data needed to determine adjustments are as follows: If an
amount box does not require an entry, leave it blank.
July 31: During July, PS Music provided guest disc jockeys for
KXMD for a total of 115 hours. The contract requires PS Music
to provide a guest disc jockey for 80 hours per month for a
monthly fee of $3,600, which PS Music has already received
payment for. Any additional hours beyond 80 will be billed to
KXMD at $40 per hour.
Account
Post. Ref.
Debit
Credit
fill in the blank 2
fill in the blank 3
fill in the blank 4
fill in the blank 6
fill in the blank 7
fill in the blank 8
July 31: Supplies on hand at July 31, $275.
Account
Post. Ref.
Debit
Credit
fill in the blank 10
fill in the blank 11
fill in the blank 12

7. fill in the blank 14
fill in the blank 15
fill in the blank 16
July 31: The balance of the prepaid insurance account relates to
the following July 1, 20Y5 transaction: "Paid a premium of
$2,700 for a comprehensive insurance policy covering liability,
theft, and fire. The policy covers a one-year period."
Account
Post. Ref.
Debit
Credit
fill in the blank 18
fill in the blank 19
fill in the blank 20
fill in the blank 22
fill in the blank 23
fill in the blank 24
July 31: Depreciation of the office equipment is $50.
Account
Post. Ref.
Debit
Credit
fill in the blank 26
fill in the blank 27
fill in the blank 28
fill in the blank 30
fill in the blank 31
fill in the blank 32

8. July 31: The balance of the unearned revenue account relates to
the contract between PS Music and KXMD, described in the
July 3, 20Y5 transaction, which included the following: "On
behalf of PS Music, Peyton signed a contract with a local radio
station, KXMD, to provide guest spots for the next three
months. The contract requires PS Music to provide a guest disc
jockey for 80 hours per month for a monthly fee of $3,600." In
accordance with the contract, Peyton received $7,200 from
KXMD as an advance payment for the first two months.
Account
Post. Ref.
Debit
Credit
fill in the blank 34
fill in the blank 35
fill in the blank 36
fill in the blank 38
fill in the blank 39
fill in the blank 40
July 31: Accrued wages as of July 31 were $140.
Account
Post. Ref.
Debit
Credit
fill in the blank 42
fill in the blank 43
fill in the blank 44
fill in the blank 46

9. fill in the blank 47
fill in the blank 48
Continuing Problem
Chapter 3 - Instruction #2
Post the adjusting entries completed in Chapter 3 Part 1 to the
ledgers in the spreadsheet you saved in Chapter 2 Part 3. Extend
the account balance to the appropriate balance column after
each posting. Be sure to save your work in the spreadsheet.
Chapter 3 - Instruction #3
Refer to the spreadsheet you updated in Chapter 3 Part 2 to
prepare an adjusted trial balance.
Note: Be sure to save this part with a screen shot or print it out.
You will need to refer to your adjusted trial balance to complete
the financial statements in Chapter 4 Part 1 of the continuing
problem.
If an amount box does not require an entry, leave it blank.
PS Music
Adjusted Trial Balance
July 31, 20Y5
Line Item Description
Debit
Balances
Credit
Balances
fill in the blank 2
fill in the blank 3
fill in the blank 5
fill in the blank 6
fill in the blank 8
fill in the blank 9

10. fill in the blank 11
fill in the blank 12
fill in the blank 14
fill in the blank 15
fill in the blank 17
fill in the blank 18
fill in the blank 20
fill in the blank 21
fill in the blank 23
fill in the blank 24
fill in the blank 26
fill in the blank 27
fill in the blank 29
fill in the blank 30
fill in the blank 32
fill in the blank 33
fill in the blank 35
fill in the blank 36
fill in the blank 38
fill in the blank 39
fill in the blank 41
fill in the blank 42
fill in the blank 44
fill in the blank 45

11. fill in the blank 47
fill in the blank 48
fill in the blank 50
fill in the blank 51
fill in the blank 53
fill in the blank 54
fill in the blank 56
fill in the blank 57
fill in the blank 59
fill in the blank 60
fill in the blank 62
fill in the blank 63
fill in the blank 65
fill in the blank 66
fill in the blank 67
fill in the blank 68
Balance Sheet AccountsCONTINUING PROBLEM- The
following ledger accounts appear below, in this order: Cash,
Accounts Receivable, Supplies, Prepaid Insurance, Office
Equipment, Accumulated Depreciation - Office
Equipment,Accounts Payable, Wages Payable, Unearned
Revenue, Peyton Smith, Capital, Peyton Smith, Drawing, and
Income Summary - Beginning balances from the textbook have
already been entered. - The remaining accounts are found on the
next page.An asterisk (*) will appear in the column to the right
of an incorrect amount.LEDGERS - Balance Sheet
accountsCash11PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balanc

12. e√3,92007/01Cash 15,0008,92007/01Paid
Rent11,7507,17007/01Paid Insurance12,7004,47007/01Cash
11,0005,47007/03Cash
17,20012,67007/03Paid125012,42007/04Paid Attorney's
Fees190011,52007/08Paid Adviertisement120011,32007/11Cash
11,00012,32007/13Paid Equipment Rental 170011,62007/14Paid
Wages11,20010,42007/16Cash 22,00012,42007/21Paid Music
262011,80007/22Paid Radio
Advertisement280011,00007/23Cash 275011,75007/27Paid
Utilities291510,83507/28Paid Wages 21,2009,63507/29Paid
Mis. Exp25409,09507/30Cash 25009,59507/31Cash
23,00012,59507/31Paid royalties21,40011,19507/31Paid
Dividens21,2509,945Accounts
Receivable12PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√
1,00007/0211,000-
07/2321,7501,75007/3021,0002,750Supplies14PostBalanceDateI
temRef.Dr.Cr.Dr.Cr.7/1Balance√17007/18Purchase28501,020Pr
epaid
Insurance15PostBalanceDateItemRef.Dr.Cr.Dr.Cr.07/0112,7002,
700Office
Equipment17PostBalanceDateItemRef.Dr.Cr.Dr.Cr.07/05Purcha
se on account17,5007,500Accumulated Depreciation - Office
Equipment18PostBalanceDateItemRef.Dr.Cr.Dr.Cr.Accounts
Payable21PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√250
07/03Paid250-07/05Purchase Off.
Equipment17,5007,50007/18Purchase Suppli28508,350Wages
Payable22PostBalanceDateItemRef.Dr.Cr.Dr.Cr.07/14Paid
wages 107/28Paid wages 2Unearned
Revenue23PostBalanceDateItemRef.Dr.Cr.Dr.Cr.07/03Unearned
17,2007,200Peyton Smith,
Capital31PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√4,00
007/01Common Stock 15,0009,000Peyton Smith,
Drawing32PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√50
007/31Dividens21,2501,750
Income Statement AccountsCONTINUING PROBLEM- The
following ledger accounts appear below, in this order: Fees

13. Earned, Wages Expense, Office Rent Expense, Equipment Rent
Expense, Utilities Expense, Music Expense, Advertising
Expense, Supplies Expense, Insurance Expense, Depreciation
Expense, and Miscellaneous Expense - Beginning balances from
the textbook have already been entered. - The remaining
accounts are found on the next page.An asterisk (*) will appear
in the column to the right of an incorrect amount.LEDGERS -
Income Statement accountsFees
Earned41PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√6,20
0Wages
Expense50PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√40
0Office Rent
Expense51PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√80
0Equipment Rent
Expense52PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√67
5Utilities
Expense53PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√30
0Music
Expense54PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/ 1Balance√1,5
90Advertising
Expense55PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√50
0Supplies
Expense56PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√18
0Insurance
Expense57PostBalanceDateItemRef.Dr.Cr.Dr.Cr.Depreciation
Expense58PostBalanceDateItemRef.Dr.Cr. Dr.Cr.Miscellaneous
Expense59PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√41
5
BSCONTINUING PROBLEM- The following ledger accounts
appear below, in this order: Cash, Accounts Receivable,
Supplies, Prepaid Insurance, Office Equipment, Accumulated
Depreciation - Office Equipment,Accounts Payable, Wages
Payable, Unearned Revenue, Kris Payne, Capital, Kris Payne,
Drawing, and Income Summary - The remaining accounts are
found on the next page.An asterisk (*) will appear in the
column to the right of an incorrect amount.LEDGERS - Balance

14. Sheet
accountsCash11PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balanc
e√3,9205,0008,9201,7507,1702,7004,4701,0005,4707,20012,67
025012,60012,42090011,52020011,3201,00012,32070011,6201,
20010,4202,00012,42062011,80080011,00075011,75091510,835
1,2009,6355409,0955009,5953,00012,5951,40011,1951,2509,94
5Accounts
Receivable12PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√
1,0001,000-
1,7501,7501,0002,7501,4004,150Supplies14PostBalanceDateIte
mRef.Dr.Cr.Dr.Cr.7/1Balance√1708501,020745275Prepaid
Insurance15PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/12,7002,700
2252,475Office
Equipment17PostBalanceDateItemRef.Dr.Cr.Dr.Cr.5/57,5007,50
0Accumulated Depreciation - Office
Equipment18PostBalanceDateItemRef.Dr.Cr.Dr.Cr.5050Account
s
Payable21PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√250
250-7,5007,5008508,350Wages
Payable22PostBalanceDateItemRef.Dr.Cr.Dr.Cr.140140Unearne
d
Revenue23PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7,2007,2003,60
03,600Peyton Smith ,
Capital31PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√4,00
05,0009,0004,95513,9551,75012,205Peyton Smith,
Drawing32PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√50
01,2501,7501,750-Income
Summary33PostBalanceDateItemRef.Dr.Cr.Dr.Cr.21,20021,200
16,2454,9554,955--
ISCONTINUING PROBLEM- The following ledger accounts
appear below, in this order: Fees Earned, Wages Expense,
Office Rent Expense, Equipment Rent Expense, Utilities
Expense, Music Expense, Advertising Expense, Supplies
Expense, Insurance Expense, Depreciation Expense, and
Miscellaneous Expense - The remaining accounts are found on
the next page.An asterisk (*) will appear in the column to the

15. right of an incorrect amount.LEDGERS - Income Statement
accountsFees
Earned41PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√6,20
01,0007,2002,0009,2002,50011,7001,50013,2003,00016,2001,4
0017,6003,60021,20021,200-Wages
Expense50PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√40
01,2001,6001,2002,8001402,9402,940-Office Rent
Expense51PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√80
01,7502,5502,550-Equipment Rent
Expense52PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√67
57001,3751,375-Utilities
Expense53PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√30
09151,2151,215-Music
Expense54PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√1,5
906202,2101,4003,6103,610-Advertising
Expense55PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√50
02007008001,5001,500-Supplies
Expense56PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√18
0745925925-Insurance
Expense57PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Adjusting√2
25225225-Depreciation
Expense58PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Adjusting√5
05050-Miscellaneous
Expense59PostBalanceDateItemRef.Dr.Cr.Dr.Cr.7/1Balance√41
59001,3155401,8551,855-