Chapter 2, Exercise 12, due 9/19, 1 point

Please see additional instructions below.

Requirement 1

Requirement 2

Requirement 3: Refer back to chapter 2, multiple choice question 2. Explain why the income statement accounts are called nominal whereas the balance sheet accounts are called real and permanent

An adjusted trial balance means that adjusting entries (e.g. depreciation) have already occurred by the closing entries have not yet occurred. This means that the retained earnings balance is not up to date.

Finance majors need to complete requirement 1; accounting majors should complete both requirements. I do not expect a perfect job on requirement 1. Acceptable work will earn 0.85 points. If you submit an acceptable answer to requirement 3, you can get up to 0.9 points. To get the full point, you need to impress me with your answer to requirement 3.

The December 31, 2021, adjusted trial balance for the Blueboy Cheese Corporation is presented below. Account Title Debits Credits Cash 21,000 300,000 Accounts receivable Prepaid rent 10,000 50,000 Inventory 600,000 250,000 60,000 60,000 8,000 2,000 400,000 Office equipment Accumulated depreciation Accounts payable Notes payable (due in six months) Salaries payable Interest payable Common stock Retained earnings Sales revenue Cost of goods sold Salaries expense Rent expense Depreciation expense Interest expense Advertising expense 100,000 800,000 480,000 120,000 30,000 60,000 4,000 5,000 Totals 1,680,000 1,680,000 Required: 1. Prepare an income statement for the year ended December 31, 2021, and a classified balance sheet as of December 31, 2021. 2. Prepare the necessary closing entries at December 31, 2021