Preparing Financial Statements and Closing Entries of a Profitable Company
Garden Wizards provides gardening services to both commercial and residential customers. The company performs adjusting entries on a monthly basis, whereas closing entries are prepared annually at December 31. An adjusted trial balance dated December 31,2011, follows.
GARDEN WIZARDS ADJUSTED TRIAL BALANCE DECEMBER 31 , 2011 | ||
| Debits | Credits |
Cash | $ 27,800 |
|
Accounts receivable | 4,300 |
|
Unexpired insurance | 8,700 |
|
Prepaid rent | 3,200 |
|
Supplies | 1,400 |
|
Trucks | 140,000 |
|
Accumulated depreciation |
| $ 75,000 |
Equipment | 28,000 |
|
Accumulated depreciation: equipment |
| 14,000 |
Accounts payable |
| 2,200 |
Notes payable |
| 38,000 |
Salaries payable |
| 900 |
Interest payable |
| 300 |
Income taxes payable |
| 1,700 |
Uneamed service revenue |
| 2,000 |
Capital stock |
| 18,000 |
Retained earnings |
| 21,000 |
Dividends | 3,300 |
|
Service revenue earned |
| 194,000 |
Insurance expense | 1,800 |
|
Office rent expense | 28,000 |
|
Supplies expense | 5,600 |
|
Salary expense | 72,000 |
|
Depreciation expense: trucks | 16,000 |
|
Depreciation expense: equipment | 4,000 |
|
Repair and maintenance expense | 5,300 |
|
Fuel expense | 2,200 |
|
Miscellaneous expense | 2,700 |
|
Interest expense | 3,800 |
|
Income taxes expense | 9,000 |
|
| $367,100 | $367,100 |
Instructions
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.
b. Prepare the necessary year-end closing entries.
c. Prepare an after-closing trial balance.
d. Using the financial statements prepared in part a, briefly evaluate the company's profitability and liquidity.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.