Exercise 5.3

Wilderness Guide Services, Inc., performs adjusting entries every month, but closes its accounts only at year-end. The company's year-end adjusted trial balance dated December 31, current year, is as follows.

a. Prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company's balance sheet dated December 31, current year.

b. Does the company appear to be liquid? Defend your answer.

c. Has the company been profitable in the past? Explain.

1 company appear to be liquid? Defend your answer. Has the company been profitable in the past? Explain. e December 31, current year. c. L05-1, L05-2, L05-6 EXERCISE 5.3 Financial Statement Preparation Wilderness Guide Services, Inc., performs adiusting entries every month, but closes its accounts only at year-end. The company's vear-end le company's year-end adjusted trial balance dated December 31, current year, is as follows. $ 12.200 31,000 7.900 2.400 70,000 WILDERNESS GUIDE SERVICES, INC. ADJUSTED TRIAL BALANCE DECEMBER 31, CURRENT YEAR Cash................ Accounts receivable... Camping supplies Unexpired insurance policies ........... Equipment ..... Accumulated depreciation: equipment.... Notes payable (due 4/1ext year)..... Accounts payable ..... Capital stock. ...... Retained earnings.............. ... Dividends ......................... Guide revenue earned........................ Salary expense .................... Camping supply expense ........... Insurance expense. Depreciation expense: equipment..... Interest expense.... $ 60,000 18,000 9,500 25,000 15,000 1,000 102,000 87,500 1,200 9,600 5,000 1.700 $229,500 $229,500 a. Prepare an income statement and statement of retained earnings for the year ended December 31, current year. Also prepare the company's balance sheet dated December 31, current year, (Hint: Unprofitable companies have no income taxes expense.) b. Does the company appear to be liquid? Defend your answer. c. Has the company been profitable in the past? Explain