Mystic Masters, Inc., provides fortune-telling services over the Internet. In recent years the company has experienced severe financial difficulty. Its accountant prepares adjusting entries on a monthly basis, and closing entries on an annual basis, at December 31. An adjusted trial balance dated December 31, 2015, follows.

Mystcis Masters, Inc.

Adjuested Trial Balance

31-Dec-15

	Debits	Credits
	$
cash	960.00
	$
Accounts Receivable	200.00
	$
Unexpired Insurance	3,000.00
	$
Prepaid Rent	1,500.00
	$
Office Supplies	200.00
	$
Funtiture and Fixtures	9,400.00
Accumulated Depreciation: Office		$
Equipment		5,200.00
		$
Accounts Payable		7,540.00
		$
Notes Payable		24,000.00
		$
Salaries payable		1,700.00
		$
Interest Payable		260.00
		$
Unearned Client Revenue		200.00
		$
Capital Stock		5,000.00
		$
Retained earnings		2,600.00
		$
Clients Revenue Earned		54,000.00
	$
Insurance Expense	6,000.00
	$
Office Rent expenses	9,000.00
	$
Supplies Expense	440.00
	$
Salary expense	50,000.00
	$
Depreciation Expense: Furniture & Fixtures	1,400.00
Office and Telephone Expense	$

	3,000.00
	$
Internet Service Expense	4,900.00
	$
Legal Expense	1,500.00
	$
Interest Expense	4,000.00
	$
Miscellaneous Expense	5,000.00
	$	$
	100,500.00	100,500.00

Instructions

a. Prepare an income statement and statement of retained earnings for the year ended December

31, 2015. Also prepare the companys balance sheet dated December 31, 2015. (Hint: The company incurred no income taxes expense in 2015.)

b. Prepare the necessary year-end closing entries.

c. Prepare an after-closing trial balance.