Anne Marie, the owner of Annes Beauty Salon, comes to see you again. She tells you that she has one more question for you. She told you that her accountant tried to explain to her the closing process in the accounting cycle. The more he talked, the more confusing it got. How would you explain the closing process to Anne Marie?

She also asked about dividends. What are they? Will they increase expense?

Anne's Beauty Salon, Inc			Note, Income Statements should be monthly. This Income Statement is for training purposes, ONLY!
Income Statement
For the Year 2015
Sales (Revenue)	$ 125,000.00
Cost of Sales	$ 25,000.00
Gross Profit	$ 100,000.00
Payroll Expense	$ 67,500.00
Sales, General, Administrative Expense	$ 5,000.00
Rent Expense	$ 1,400.00
Utilities Expense	$ 1,670.00
Insurance Expense	$ 500.00
Depreciation Expense	$ 2,500.00
Total Operating Expense	$ 78,570.00
Total Operating Income	$ 21,430.00
Taxes 30%	$ 6,430.00
Net Income	$ 15,000.00

Anne's Beauty Salon, Inc
Balance Sheet
At December 31, 2015
Assets			Liabilities
Current Assets			Current Liabilities
Cash		$ 949.50	Accounts Payable	$ 5,000.00
Accounts Receivable		$ 11,948.00	Unearned Revenue	$ 200.00
Supplies		$ 20,500.00	Total Current Liabilities	$ 5,200.00
Prepaid Rent		$ 8,400.00
Prepaid Insurance		$ 6,000.00
Total Current Assets		$ 47,797.50	Note Payable	$ 15,000.00
Equipment	$ 25,000.00		Total Liabilities	$ 20,200.00
Less: Accumulated Depreciation	$ (5,000.00)	$ 20,000.00	Stockholders' Equity
Total Long-Term Assets		$ 20,000.00	Common Stock	$ 30,000.00
			Retained Earnings	$ 17,597.50
Total Assets		$ 67,797.50	Total Liabilities and Stockholders' Equity	$ 67,797.50

Anne's Beauty Salon, Inc
Statement of Retained Earnings
For the Month Ending December 31, 2015
Retained Earnings, December 1	$ 5,000.00
Add: Net Income	$ 15,000.00
Subtract: Dividends	$ (2,402.50)
Retained Earnings, December 31	$ 17,597.50