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……………………………………………      $117,050Accounts receivable……………………………. 9,600Unexpired insurance………………………….   16,000Prepaid rent……………………………………….  .6,000Supplies…………………………………………..      2,150Trucks……………………………………………     300,000Accumulated depreciation: truck                                               $240,000Mowing equipment……………………….      40,000Accumulated depreciation: mowing equipment                             24,000Accounts payables…………………………….                                              3,000Notes payables…………………………....................................................           100,000Salaries payables…….............................................................................             1,800Interest payables…………………............................................................                  300Income taxes payables........................................................................               2,100Unearned mowing revenue……........................................................                1,800Capital Stock.............................................................................................              40,000Retained earnings…… ...........................................................................             60,000Dividends………………………                              10,000Mowing revenue earned……………….....................................................         340,000Insurance expense……………….                     4,800Office rent expense…………………..             72,000Supplies expense……………………..                10,400Salary expense…………………………..             120,000Depreciation expense: truck………..           60,000Depreciation expense: mowing equipment  8,000Repair and maintenance expense……….     6,000 Fuel  expense…………………………………         3,000Miscellaneous expense…………………          10,000Interest expense…………………………….        6,000Income taxes expense………………..            12,000                                                                  $813,000                        $813,000             I need do:Prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company’s balance sheet dated December 31, current yearPrepare the necessary year end closing entriesPrepare an after closing trial balanceUsing the financial statement prepared in part a, briefly evaluate the company’s profitability and liquidity

Question
Asked Jun 25, 2019

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             

I need do:

  1. Prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company’s balance sheet dated December 31, current year
  2. Prepare the necessary year end closing entries
  3. Prepare an after closing trial balance
  4. Using the financial statement prepared in part a, briefly evaluate the company’s profitability and liquidity

 

 

 

 

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Expert Answer

Step 1

Since we are entitled to answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and specify the other subparts (up to 3) you’d like to get answered.

  1. Income statement is a statement prepared to calculate the net income of a company after deducting expenses from the revenue
Income statement in the books of Company A
For the year ended 31st Dec. 2019
Amount S Amount S
Revenue (s):
Revenue eamed
Expense (s):
Insurance expense
340,000
4,800
Office rent expense
Supplies expense
Salary expense
Depreciation expense: trucks
72,000
10,400
120,000
60,000
Depreciation expense: mowing
equipment
Repairs and maintenance expense
8,000
6,000
Fuel expense
Miscellaneous expense
Interest expense
3,000
10,000
6,000
(S300,200)
39,800
Income before income tax
Income tax expense
12,000
Net income for the year
27,800
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Income statement in the books of Company A For the year ended 31st Dec. 2019 Amount S Amount S Revenue (s): Revenue eamed Expense (s): Insurance expense 340,000 4,800 Office rent expense Supplies expense Salary expense Depreciation expense: trucks 72,000 10,400 120,000 60,000 Depreciation expense: mowing equipment Repairs and maintenance expense 8,000 6,000 Fuel expense Miscellaneous expense Interest expense 3,000 10,000 6,000 (S300,200) 39,800 Income before income tax Income tax expense 12,000 Net income for the year 27,800

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Step 2

Retained earnings is the profit which is reinvested in the business rather than distributing it to the shareholder’s

Statement of retained earnings
For the year ended 31t Dec. 2019
Amount
Retained earnings at the beginning of the year 60,000
Add: Net income
27,800
Less: dividend
Retained earnings at the end of the year
10,000
77,800
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Statement of retained earnings For the year ended 31t Dec. 2019 Amount Retained earnings at the beginning of the year 60,000 Add: Net income 27,800 Less: dividend Retained earnings at the end of the year 10,000 77,800

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Step 3

Balance sheet is the financial statement of a company. It helps in maintaining the records...

Balance sheet of company A
| For the year ended 31
Dec. 2019
Amount
S
Amount
Assets
Cash
117,050
9,600
16,000
6,000
2,150
Accounts receivable
Unexpired insurance
Prepaid rent
Supplies
Trucks
Less: Accumulated depreciation
Mowing equipment
Less: Accumulated depreciation
Total Assets
300,000
(240,000)
40,000
(24,000)
60,000
16,000
226,800
Liabilities and stockholder's equity
Accounts payable
Notes payable
Salaries payable
Interest payable
Income tax payable
Unearned revenue
Total liabilities
Stockholder's equity
Capital stock
Retained earnings
Total stockholder's equity
Total liabilities and stockholder's
equity
3,000
100,000
1,800
300
2,100
1,800
109,000
40,000
77,800
117,800
226,800
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Balance sheet of company A | For the year ended 31 Dec. 2019 Amount S Amount Assets Cash 117,050 9,600 16,000 6,000 2,150 Accounts receivable Unexpired insurance Prepaid rent Supplies Trucks Less: Accumulated depreciation Mowing equipment Less: Accumulated depreciation Total Assets 300,000 (240,000) 40,000 (24,000) 60,000 16,000 226,800 Liabilities and stockholder's equity Accounts payable Notes payable Salaries payable Interest payable Income tax payable Unearned revenue Total liabilities Stockholder's equity Capital stock Retained earnings Total stockholder's equity Total liabilities and stockholder's equity 3,000 100,000 1,800 300 2,100 1,800 109,000 40,000 77,800 117,800 226,800

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