This document presents a comprehensive solution to an accounting homework assignment. Part A details the recording of transactions using T-accounts, balancing accounts, and extracting a trial balance. It includes the preparation of an income statement and a statement of financial position, along with a letter to Linda explaining drawings. Part B focuses on ratio calculations, comparing Linda's business ratios to industry averages, and analyzing gross profit, net profit margin, quick ratio, current ratio, accounts receivable, and accounts payable ratios. The solution also includes an introduction explaining the fundamental accounting equation and a conclusion summarizing the key findings and the impact of transaction recording on financial statements, supported by references to relevant books and journals.
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