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.

Please see additional instructions below. The December 31, 2021, adjusted trial balance for the Blueboy Cheese Corporation is presented below. Account Title Debits Credits Cash 21,000 Accounts receivable 300,000 Prepaid rent 10,000 Inventory 50,000 Office equipment 600,000 Accumulated depreciation 250,000 Accounts payable 60,000 Notes payable (due in six months) 60,000 Salaries payable 8,000 Interest payable 2,000 Common stock 400,000 Retained earnings 100,000 Sales revenue 800,000 Cost of goods sold 480,000 Salaries expense 120,000 Rent expense 30,000 Depreciation expense 60,000 Interest expense 4,000 Advertising expense 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. Requirement 1 Requirement 2