Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello

تمرين 35

Preparing Financial Statements and Closing Entries of an Unprofitable Company
Mystic Masters, Inc., provides fortune-telling services over the Internet. In recent years the company has experienced severe financial difficulty. Its accountant prepares adjusting entries on a monthly basis, and closing entries on an annual basis, at December 31. An adjusted trial balance dated December 31, 2015, follows.

Instructions
a. Prepare an income statement and statement of retained earnings for the year ended December 31, 2015. Also prepare the company's balance sheet dated December 31, 2015. (Hint: The company incurred no income taxes expense in 2015.)
b. Prepare the necessary year-end closing entries.
c. Prepare an after-closing trial balance.
d. Using the financial statements prepared in part a, briefly evaluate the company's performance.
e. Identify information that the company is apt to disclose in the notes that accompany the financial statements prepared in part a.