Preparing Financial Statements and Closing Entries

Hayley Inc. prepared the following adjusted trial balance as of December 31, 2020.

Adjusted Trial Balance
Account	Debit	Credit
Cash	$30,000	$
Accounts receivable	32,000
Inventory	40,000
Prepaid insurance	1,200
Equipment	225,000
Accumulated depreciationequipment		45,000
Accounts payable		35,000
Salaries payable		4,000
Interest payable		400
Note payable		50,000
Common stock		110,000
Retained earnings		80,000
Dividends	3,000
Sales		350,000
Cost of goods sold	200,000
Salaries expense	119,200
Repair expense	2,100
Insurance expense	1,500
Selling expense	2,200
Depreciation expense	13,200
Interest expense	5,000
Totals	$674,400	$674,400

a. Prepare the income statement for Hayley Inc. for the year ended December 31, 2020.

Note: Enter revenues and expenses in the order of the largest dollar amount to the smallest dollar amount. Note: Do not use negative signs with any of your answers.

Hayley Inc.
Income Statement
For the Year Ended December 31, 2020
Revenues
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
Total Revenues		Answer
Expenses
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income	Answer
Total Expenses		Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet income		Answer

b. Prepare closing entries as of December 31, 2020.

General Journal
Account Name		Dr.	Cr.
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
To close revenues to income summary.
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
Salaries Expense		Answer	Answer
Depreciation Expense		Answer	Answer
Selling Expense		Answer	Answer
Repair Expense		Answer	Answer
Insurance Expense		Answer	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	5,000
To close expenses to income summary.
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
To close income summary to retained earnings.
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
AnswerRetained EarningsDividendsSalesCost of Goods SoldSalaries ExpenseRepair ExpenseInsurance ExpenseSelling ExpenseDepreciation ExpenseInterest ExpenseIncome SummaryNet Income		Answer	Answer
To close dividends to retained earnings.

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