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. GREEN LAWNS, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR Cash $ 218,640 Accounts receivable 10,800 Supplies 720 Equipment 28,800 Accumulated depreciation: equipment $ 12,000 Accounts payable 3,600 Income taxes payable 8,400 Capital stock 60,000 Retained earnings 108,000 Dividends 4,800 Lawn care revenue earned 230,400 Salary expense 124,800 Supply expense 2,880 Advertising expense 720 Depreciation expense: equipment 2,400 Income taxes expense 27,840 $ 422,400 $422,400 Required: 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.
