2. Define what is working capital and how do you know if a company has a good liquidity position.

Closing Entries Accounts Titles Sale Tax expenses Income Summary (to close revenue account and credit balance account) Debit Credit 1,050,989 138 1051127.00 1,051,543 Income Summary COGS Consulting expenses Insurance expenses Salary expenses Utility expenses Depreciation expenses Store depreciation expenses (to close expenses account) 996,182 1,200 1,000 6,000 4,900 8,911 33,350 416.00 Retained earnings Income Summary (to close income summary account) 416.00 12,000 Retained earning Dividend (to close divident account) 12,000 Income Statement 1,050,989 996,182 54,807 Sale COGS Gross profif Expenses: Consulting expenses Insuranse expenses Salary expenses Utility expenses Depreciation expenses Store depreciation expenses Tax expenses 1,200 1,000 6,000 4,900 8,911 33,350 - 138 55,223 -416 Net Loss Balance Sheet Assets: Current Asset Cash Inventory Unexpired insurance Total curent asset 25,369 576,366 20,000 621,735 Prperty & Equipment Store Building Accumulated Depreciation store 666,999 - 166,750 500,249 Office Furniture Accumulated Depreciation 44,555 -26,733 17,822 1,139,806 Total Assets Liability Note payable Accounts payable Tax payable Total current liability 244,000 100,890 5,000 349,890 Equity Capital stock Retain earning 234,567 555349.00 Total liability & equity 789916.00 1,139,806 Stetamnet of retained earning 567,765 Beginning Balance Less: Divident Less: Net loss 12,000 416 Closing Balance 12,416 555,349