Alison and Chuck Renny began operations of their furniture repair shop (Lazy Sofa Furniture, Inc.) on January 1, 2011. The annual reporting period ends December 31. The trial balance on January 1, 2012, appears on the following page (amounts are rounded to thousands of dollars to simplify):
Transactions during 2012 (summarized in thousands of dollars) follow:
a. Borrowed $21 cash on July 1, 2012, signing a six-month note payable.
b. Purchased equipment for $18 cash on July 1, 2012.
c. Issued additional shares of stock for $5.
d. Earned revenues for 2012 in the amount of $65, including $9 on credit and $56 received in cash.
e. Recognized operating expenses for 2012, $35, including $7 on credit and $28 in cash.
f. Purchased additional equipment, $3 cash.
g. Collected accounts receivable, $8.
h. Paid accounts payable, $11.
i. Purchased on account supplies for future use, $10.
j. Received a $3 deposit on work to start January 15, 2013.
k. Declared and paid a cash dividend, $10.
Data for adjusting journal entries:
l. Supplies of $4 were counted on December 31, 2012.
m. Depreciation for 2012, $2.
n. Accrued interest on notes payable of $1.
o. Wages earned since the December 24 payroll not yet paid, $3.
p. Income tax for 2012 was $4, and will be paid in 2013.
Required:
1. Set up T-accounts for the accounts on the trial balance and enter beginning balances.
2. Record journal entries for transactions (a) through (k), and post them to the T-accounts. Note that Lazy Sofa classifies the cost of its wages and supplies used-up as "operating expenses."
3. Prepare an unadjusted trial balance.

4. Record and post the adjusting journal entries (l) through (p).
5. Prepare an adjusted trial balance.
6. Prepare an income statement, statement of retained earnings, and balance sheet.
7. Prepare and post the closing journal entries.
8. Prepare a post-closing trial balance.
9. How much net income did Lazy Sofa Furniture, Inc., generate during 2012? Is the company financed primarily by liabilities or stockholders' equity?

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Debit Credit $ 5 Accounts Receivable ies Accumulated Depreciation Other Noncurrent Assets 0 9 Notes Payable Income Tax Payable evenue Contributed Capital Retained Earnings Dividends Declared 15 0 0 $26 $26