Affordable Lawn Care, 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, 2015, follows. AFFORDABLE LAWN CARE, INC.
Adjusted Trial Balance
December 2015, 31
Debits Credits
Cash $ 117,050
Accounts receivable 9,600
Unexpired insurance 16,000
Prepaid rent 6,000
Supplies 2,150
Trucks 300,000
Accumulated depreciation: trucks $ 240,000
Mowing equipment 40,000
Accumulated depreciation: mowing equipment 24,000
Accounts payable 3,000
Notes payable 100,000
Salaries payable 1,800
Interest payable 300
Income taxes payable 2,100
Unearned mowing revenue 1,800
Capital stock 40,000
Retained earnings 60,000
Dividends 10,000
Mowing revenue earned 340,000
Insurance expense 4,800
Office rent expense 72,000
Supplies expense 10,400
Salary expense 120,000
Depreciation expense: trucks 60,000
Depreciation expense: mowing equipment 8,000
Repair and maintenance expense 6,000
Fuel expense 3,000
Miscellaneous expense 10,000
Interest expense 6,000
Income taxes expense 12,000
$ 813,000 $ 813,000
a-1. Prepare an income statement for the year ended December 31, 2015.
a-2. Prepare a statement of retained earnings for the year ended December 31, 2015.
a-3. Prepare the company's balance sheet dated December 31, 2015.
b. Prepare the necessary year-end closing entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
c. Prepare an after-closing trial balance
d. Using the financial statements prepared in part a, briefly evaluate the company's profitability and liquidity. (Round your percentage answers to 1 decimal place (i. e. .1234 should be entered as 12.3))