Managerial Accounting: P5-2A Lawn Pride, Inc., provides lawn-mowing services

Managerial Accounting 
P5-2A 
Lawn Pride, Inc., provides lawn-mowing services to both commercial and residential customers. The company performs adjusting entries on a monthly basis, whereas closing entries are prepared annually at December 31. An adjusted trial balance dated December 31, 2011, follows. 
LAWN PRIDE. INC. 
Adjusted trail Balance 
December 31,2011 
Debits Credits 
Cash 58,525 
Accounts receivable 4,800 
Unexpired Insurance 8,000 
Prepaid rent 3,000 
Supplies 1,075 
Trucks 150,000 
Accumulated Depreciation: trucks 120,000 
Mowing equipment 20,000 
Accumulated Depreciation: mowing equipment 12,000 
Accounts Payable 1,500 
Notes Payable 50,000 
Salaries Payable 900 
Interest Payable 150 
Income taxes payable 1,050 
Unearned mowing revenue 900 
Capital stock 20,000 
Retained earnings 30,000 
Dividends 5,000 
Mowing revenue earned 170,000 
Insurance expense 2,400 
Office rent expense 36,000 
Supplies expense 5,200 
Salary expense 60,000 
Depreciation expense: trucks 30,000 
Depreciation expense: mowing equipment 4,000 
Repair and maintenance expense 3,000 
Fuel expense 1,500 
Miscellaneous expense 5,000 
Interest expense 3,000 
Income taxes expense 6,000 
$406,500 $406,500 

Instructions: 
a. Prepare an income statement and statement of retained earnings for the year ended December 31, 2011. Also prepare the company's balance sheet dated December 31, 2011. 
b. Prepare the necessary year-end closing entries. 
c. Prepare an after-closing trial balance. 
d. Using the financial statements prepare in part a, briefly evaluate the company's profitability and liquidity.
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