Refer to the adjusted trial balance of Wilderness Guide Service Inc., illustrated in Exercise 5.3 (3E) to respond to the following items.

a. Prepare all necessary closing entries at December 31, 2007. Prepare an after closing trial balance dated December 31, 3007. Compare 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.)

Wilderness Guide Service

Adjusted Trial Balance

December 31, 2007

Cash 12,200

Accounts Receivable 31,000

Camping Supplies 7,900

Unexpired insurance Policies 2,400

Equipment 70,000

Accumulated Depreciation: equipment 60,000

Notes payable (due 4/1/09) 18,000

Accounts Payable 9,500

Capital Stock 25,000

Retained earnings 15,000

Dividends 1,000

Guide Revenue earned 102,000

Salary Expenses 87,500

Camping Supply expense 1,200

insurance Expense 9,600

Depreciation expense: equipment 5,000

Interest Expense 1,700

229,500 229,500