Financial Statement Preparation
Wilderness Guide Services, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The company's year-end adjusted trial balance dated December 31,2011, follows:
WILDERNESS GUIDE SERVICES, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, 2011 | ||
Cash | $ 12,200 |
|
Accounts receivable | 31,000 |
|
Camping supplies | 7,900 |
|
Unexpired insurance policies | 2,400 |
|
Equipment | 70,000 |
|
Accumulated depreciation: equipment |
| $ 60,000 |
Notes payable (due 4/1/12) |
| 18,000 |
Accounts payable |
| 9,500 |
Capital stock |
| 25,000 |
Retained earnings |
| 15,000 |
Dividends | 1,000 |
|
Guide revenue earned |
| 102,000 |
Salary expense | 87,500 |
|
Camping supply expense | 1,200 |
|
Insurance expense | 9,600 |
|
Depreciation expense: equipment | 5,000 |
|
Interest expense | 1,700 |
|
| $229,500 | $229,500 |
a. Prepare an income statement and statement of retained earnings for the year ended December 31, 2011. Also prepare the company's balance sheet dated December 31, 2011. (Hint: Unprofitable companies have no income taxes expense.)
b. Does the company appear to be liquid? Defend your answer.
c. Has the company been profitable in the past? Explain.
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