Sarda Electrical Servicing began operations two years ago. Its adjusted account balances at December 31, 2020, are listed alphabetically below. The owner, Nymeth Sarda, made a $20,000 investment early in the year just ended December 31, 2020.

Required

1. Prepare an income statement, statement of changes in equity, and classified balance sheet based on the information provided.

2. Prepare the closing entries.

3. Prepare the post-closing trial balance.

Account Account Balance*
Accounts payable .............................................................................. $ 21,000
Accounts receivable ............................................................................. 10,500
Accumulated depreciation, tools ......................................................... 4,500
Accumulated depreciation, truck ....................................................... 21,000
Cash ......................................................................................................... 5,000
Copyright ................................................................................................ 5,100
Depreciation expense, tools ................................................................ 2,250
Depreciation expense, truck ................................................................ 3,600
Electrical revenue .............................................................................. 126,600
Electrical supplies ................................................................................ 19,000
Insurance expense ................................................................................ 1,275
Interest expense ...................................................................................... 900
Notes receivable** ............................................................................. 12,000
Nymeth Sarda, capital ........................................................................ 27,825
Nymeth Sarda, withdrawals .............................................................. 61,500
Notes payable, due August 31, 2022 ................................................ 27,000
Notes payable, due June 1, 2021 ......................................................... 2,550
Prepaid insurance ................................................................................. 1,050
Prepaid rent ........................................................................................... 7,200
Rent expense ....................................................................................... 21,000
Salaries expense .................................................................................. 27,000
Salaries payable ..................................................................................... 3,150
Tools ...................................................................................................... 21,000
Truck ...................................................................................................... 40,500
Unearned electrical revenue ................................................................ 5,250

Analysis Component: Cupcakes owners Lori and Heather, featured in the chapter-opening vignette, have financed a significant portion of their growth by reinvesting profits. Is Nymeth Sarda, the owner of Sarda Electrical Servicing, following a similar practice? Explain.