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Problem 5.2A Preparing Financial Statements and Cl...




Problem 5.2A Preparing Financial Statements and Closing Entries of a Profitable Company L.O. 1, 2, 4-6 Lawn Pride, Inc., provides lawn mowing 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, 2009, follows. LAWN PRIDE, INC. Adjusted Trial Balance December 31, 2009 Debits Credits Cash $58,525 Accounts receivable 4,800 Unexpired insurance 8,000 Prepaid rent 3,000 Supplies 1,075 Trucks 150,000 Accumulated depreciation: trucks $120,000 Mowing equipment 20,000 Accumulated depreciation: mowing equipment 12,000 Accounts payable 1,500 Notes payable 50,000 Salaries payable 900 Interest payable 150 Income taxes payable 1,050 Unearned mowing revenue 900 Capital stock 20,000 Retained earnings 30,000 Dividends 5,000 Mowing revenue earned 170,000 Insurance expense 2,400 Office rent expense 36,000 Supplies expense 5,200 Salary expense 60,000 Depreciation expense: trucks 30,000 Depreciation expense: mowing equipment 4,000 Repair and maintenance expense 3,000 Fuel expense 1,500 Miscellaneous expense 5,000 Interest expense 3,000 Income taxes expense 6,000 $406,500 $ 406,500 Instructions: a. Prepare an income statement and statement of retained earnings for the year ended December 31, 2009. Also prepare the company's balance sheet dated December 31, 2009. 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. (Omit the "$" sign in your response.)


Paper#5511 | Written in 18-Jul-2015

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