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Data regarding the adjusting entries are in the following 'adjusted trial balance' table. Green Lawns, Inc., performs adjusting entries every month, but closes its accounts

Data regarding the adjusting entries are in the following 'adjusted trial balance' table.

Green Lawns, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The companys year-end adjusted trial balancedated December 31, 2015, was:

GREEN LAWNS, INC.

ADJUSTED TRIAL BALANCE

DECEMBER 31, 2015

Cash

$182,200

Accounts receivable

9,000

Supplies

600

Equipment

24,000

Accumulated depreciation: equipment

$10,000

Accounts payable

3,000

Income taxes payable

7,000

Capital stock

50,000

Retained earnings

90,000

Dividends

4,000

Lawn care revenue earned

192,000

Salary expense

104,000

Supply expense

2,400

Advertising expense

600

Depreciation expense: Equipment

2,000

Income taxes expense

23,200

_______

$352,000

$352,000

GREEN LAWNS, INC.

INCOME STATEMENT

DECEMBER 31, 2015

Revenue

Lawn care revenue

$192,000

Expenses

Supply expense

$2,400

Salary expense

104,000

Depreciation expense: Equipment

2,000

Advertising expense

600

Total expenses

-109,000

Income before tax

$83,000

Less: Income tax

-23,200

Net Income

$59,800

GREEN LAWNS, INC.

STATEMENT OF RETAINED EARNINGS

DECEMBER 31, 2015

Beginning Retained Earnings

90,000

Add: Net Income

59,800

Subtotal

149,800

Less: Dividends

4,000

Ending Retained Earnings

145,800

GREEN LAWNS, INC.

BALANCE SHEET

DECEMBER 31, 2015

Assets

Cash

182,200

Accounts receivable

9,000

Supplies

600

Equipment

24,000

Less: Accumulated depreciation

-10,000

14,000

Total assets

205,800

Liabilities & Stockholders' Equity

Liabilities:

Accounts payable

3,000

Income taxes payable

7,000

Total liabilities

10,000

Stockholders' Equity:

Capital stock

50,000

Retained earnings

145,800

Total stockholders' equity

195,800

Total liabilities & stockholders' equity

205,800

Refer to the adjusted trial balance of Green Lawns, Inc., illustrated in Exercise 5.2 to respond to the following items:

a. Prepare all necessary closing entries at December 31, 2015.

b. Prepare an after-closing trial balance dated December 31, 2015.

c. Compare the Retained Earnings balance reported in the after-closing trial balance prepared in part b to the balance reported in the adjusted trial balance. Explain why the two balances are different. (Include in your explanation why the balance reported in the after-closing trial balance has increased or decreased subsequent to the closing process.)

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