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, current year follows                                   Affordable   Lawn Care, Inc.                                       Adjusted Trial Balance                                   December 31, current year                                                          Debit                                         Credits                  Cash……………………………………………      $117,050 Accounts receivable……………………………. 9,600 Unexpired insurance………………………….   16,000 Prepaid rent……………………………………….  6,000 Supplies…………………………………………..      2,150 Trucks……………………………………………     300,000 Accumulated depreciation: truck                                               $240,000 Mowing equipment……………………….      40,000 Accumulated depreciation: mowing equipment                             24,000 Accounts payables…………………………….                                              3,000 Notes payables…………………………....................................................           100,000 Salaries payables…….............................................................................             1,800 Interest payables…………………............................................................                  300 Income taxes payables........................................................................               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: truck………..           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                Using the financial statement prepared in part a, briefly evaluate the company’s profitability and liquidity

Question

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, current year follows

 

                                Affordable   Lawn Care, Inc. 

                                     Adjusted Trial Balance

                                  December 31, current year

                                                         Debit                                         Credits                 

Cash……………………………………………      $117,050

Accounts receivable……………………………. 9,600

Unexpired insurance………………………….   16,000

Prepaid rent……………………………………….  6,000

Supplies…………………………………………..      2,150

Trucks……………………………………………     300,000

Accumulated depreciation: truck                                               $240,000

Mowing equipment……………………….      40,000

Accumulated depreciation: mowing equipment                             24,000

Accounts payables…………………………….                                              3,000

Notes payables…………………………....................................................           100,000

Salaries payables…….............................................................................             1,800

Interest payables…………………............................................................                  300

Income taxes payables........................................................................               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: truck………..           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             

 

  1. Using the financial statement prepared in part a, briefly evaluate the company’s profitability and liquidity

 

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