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EXERCISE 5.2 Financial Statement Preparation @ L05-1, QL05-2, L05-6 Green Lawns, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The
EXERCISE 5.2 Financial Statement Preparation @ L05-1, QL05-2, L05-6 Green Lawns, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The following is the company's year-end adjusted trial balance dated December 31, current year. Page 225 GREEN LAWNS, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR $ 218,640 10,800 720 28,800 Cash Accounts receivable Supplies Equipment Accumulated depreciation: equipment Accounts payable Income taxes payable Capital stock Retained earnings Dividends Lawn care revenue earned Salary expense Supply expense Advertising expense $ 12,000 3,600 8,400 60,000 108,000 4.800 230,400 124,800 2,880 720 Depreciation expense: equipment Income taxes expense 2,400 27,840 $422,400 $422,400 a. Prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company's balance sheet dated December 31, current year. b. Does the company appear to be liquid? Defend your answer. c. Has the company been profitable in the past? Explain
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