Question

Green Lawns, Inc., performs adjusting entries every month, but closes its accounts only at year- end. The following is the company's year-end adjusted trial balance dated December 31, current LO5-1, LO5-2, LO5-6 EXERCISE 5.2 year. Financial Statement Preparation Supplemental Topic, "The Worksheet."

Can someone please help me prepare this entry for me, I am stuck on stupid right now..
thanking you in advance!

Answer 1

a.

i. Income statement:

GREEN LAWNS, INC.
Income statement
For the year ended Dec 31, current year
Revenues:
Lawn care revenue earned		$230,400
Expenses:
Salary expense	$124,800
Supply expense	$2,880
Advertising expense	$720
Depreciation expense-equipment	$2,400
Income tax expense	$27,840
Total expenses		$158,640
Net income		$71,760

ii. Statement of retained earnings:

GREEN LAWNS, INC.
Statement of retained earnings
For the year ended Dec 31, current year
Retained earnings, Beginning		$108,000
Add: Net income		$71,760
Balance		$179,760
(Less): Dividends		($4,800)
Retained earnings, Ending		$174,960

iii.Balance Sheet:

GREEN LAWNS, INC.
Balance sheet
For the year ended Dec 31, current year
Assets		Liabilities and stockholder's equity
Current assets:		Current liabilities:
Cash	$218,640	Accounts payable	3600
Accounts payable	$10,800	Income tax payable	$8,400
Supplies	$720	Total liabilities	$12,000
Total current assets	$230,160
Property,plant, and equipment:		Stockholder's Equity:
Equipment	$28,800	Capital stock	$60,000
(Less): Accumulated depreciation-equipment	($12,000)	Retained earnings	$174,960
Property,plant, and equipment-net	$16,800	Total stockholder's equity	$234,960
Total assets	$246,960	Total liabilities and stockholder's equity	$246,960

b. Company appear to be more liquid as Current ratio is more than two and quick ratio is more than one. This company can meet is obligations very easily.