Strong Knot, Inc., a service company, performs adjusting entries monthly, but prepares closing entries annually on December
Question:
STRONG KNOT, INC.
STATEMENT OF RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, CURRENT YEAR
Retained earnings (per adjusted trial balance)...................................$17,500
Add: Income ..........................................................................13,100
Less: Income taxes expense ..........................................................4,000
Retained earnings, Dec. 31, current year .......................................$26,600
Instructions
a. Prepare a corrected set of financial statements dated December 31, current year. (You may assume that all of the figures in the company's adjusted trial balance were reported correctly except for Notes Payable, which is some amount other than $45,800.)
b. Prepare the necessary year-end closing entries.
c. Using the financial statements prepared in part a, briefly evaluate the company's profitability and liquidity.
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Step by Step Answer:
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-1259692406
18th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello