"Problem 4-5A

Preparing financial statements and closing entries

C1 P2

The adjusted trial balance of Karise Repairs on December 31 follows.

Adjusted Trial Balance

December 31

No.	Account Title	Debit	Credit
101	Cash	$ 14,000
124	Office supplies	1,300
128	Prepaid insurance	2,050
167	Equipment	50,000
168	Accumulated depreciation-Equipment		$ 5,000
201	Accounts payable		14,000
210	Wages payable		600
301	C. Karise, Capital		33,000
302	C. Karise, withdrawals	16,000
403	Services revenue		90,950
612	Depreciation expense-Equipment	5,000
623	Wages expense	37,500
637	Insurance expense	800
640	Rent expense	10,600
650	Office supplies expense	3,600
690	Utility expense	2,700
	Totals	$ 143,550	$143,550

Required

1. Prepare an income statement and a statement of owners equity for the year, and a classified balance sheet at December 31. Note: The C. Karise, Capital account balance was $33,000 on December 31 of the prior year, and there were no owner investments during the current year.

2. Prepare the December 31 closing entries.

Check (1) Ending capital balance, $47,750; Net income, $30,750