(L. OBJ. 1, 2, 3) Preparing a work sheet, financial statements, and closing entries [50-...

(L. OBJ. 1, 2, 3) Preparing a work sheet, financial statements, and closing entries [50-60 min]

The trial balance of Lynch Investment Advisers at December 31, 2011, follows:

Adjustment data at December 31, 2011:

a. Unearned service revenue earned during the year, $900

b. Supplies on hand, $4,000

c. Depreciation for the year, $6,000

d. Accrued salary expense, $5,000

e. Accrued service revenue, $8,000

Requirements

1. Enter the account data in the Trial Balance columns of a work sheet, and complete the work sheet. Key each adjusting entry by the letter corresponding to the data given. Leave a blank line under Service revenue.

2. Prepare the income statement, the statement of owner’s equity, and the classified balance sheet in account format.

3. Prepare closing journal entries from the work sheet.

4. Did the company have a good or a bad year during 2011? Give the reason for your answer. (Challenge)