Sarda Electrical Servicing began operations two years ago. Its adjusted account balances at December 31, 2014, are listed alphabetically below. The owner, Nymeth Sarda, made a $20,000 investment early in the year just ended December 31, 2014.
Required
1. Prepare an income statement, statement of changes in equity, and classified balance sheet based on the information provided.
2. Prepare the closing entries.
3. Prepare the post-closing trial balance.
Account Account Balance
Accounts payable $ 21,000
Accounts receivable 10,500
Accumulated depreciation, tools 4,500
Accumulated depreciation, truck 21,000
Cash 5,000
Copyright 5,100
Depreciation expense, tools 2,250
Depreciation expense, truck 3,600
Electrical fees earned 126,600
Electrical supplies 19,000
Insurance expense 1,275
Interest expense 900
Notes receivable" 12,000
Nymeth Sarda, capital 27,825
Nymeth Sarda, withdrawals 61,500
Notes payable, due August 31, 2016 27,000
Notes payable, due June 1, 2015 2,550
Prepaid insurance 1,050
Prepaid rent 7,200
Rent expense 21,000
Salaries expense 27,000
Salaries payable 3,150
Tools 21,000
Truck 40,500
Unearned electrical fees 5,250
•Assume all account balances are normal.
**$2,000 of the note is due September 15, 2015.
Analysis Component:
Refer to the chapter opening vignette. Kirk Stinchcombe financed growth by reinvesting profits. Is Nymeth Sarda, the owner of Sarda Electrical Servicing, following a similar practice? Explain.