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, 2011, follows.

Instructions
a. Prepare an income statement and statement of retained earnings for the year ended December 31, 2011. Also prepare the company’s balance sheet dated December 31, 2011.
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 andliquidity.

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LAWN PRIDE, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, 2011 Debits Credits Cash Accounts receivable Unexpired insurance Prepaid rent Supplies Trucks Accumulated depreciation: trucks Mowing equipment Accumulated depreciation: mowing equipment Accounts payable . . . - . . . Notes payable 58,525 4,800 8,000 3,000 1,075 150,000 $120,000 20,000 Interest payable Income taxes payable Unearned mowing revenue Capital stock Retained eamings . Dividends.. Mowing revenue earned Insurance expense Office rent expense····· 12,000 1,500 50,000 900 150 1,050 900 20,000 30,000 5,000 170,000 2,400 36,000 5,200 60,000 30,000 4,000 3,000 1,500 5,000 3,000 6,000 Salary expense Depreciation expense: trucks . . Depreciation expense: mowing equipment Fuel expense Miscellaneous expense Interest expense Income taxes expense . . $406,500 406,500