The Following Data Were Taken from the Accounting Records of Lorenzo

question 14

Essay

The following data were taken from the accounting records of Lorenzo Company. Except where indicated, the balances are as of December 31, 2013 before closing entries have been made. $\begin{array}{|l|r|}\hline \text { Service revenue } & \$ 83,000 \\\hline \text { Retained earnings } & 47,500 \\\hline \text { Accounts receivable } & 13,250 \\\hline \text { Salaries expense } & 44,000 \\\hline \text { Operating expense } & 7,700 \\\hline \text { Accounts payable } & 11,400 \\\hline \text { Supplies expense } & 380 \\\hline \text { Prepaid rent } & 2,000 \\\hline \text { Common stock } & 45,000 \\\hline \text { Supplies } & 200 \\\hline \text { Dividends } & 1,200 \\\hline \text { Insurance expense } & 800 \\\hline \text { Rent expense } & 10,000 \\\hline \text { Unearned revenue } & 765 \\\hline\end{array}$
Required:
a) List the accounts that should be closed at the end of 2013.
b) Prepare an income statement for Lorenzo Company for 2013.
c) What is the balance in retained earnings after closing entries have been made?

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Definitions:

Operational Definition

A clear, detailed description of a process, concept, or variable in terms of the procedures or operations required to measure it.

Depression

A mental health disorder characterized by persistently depressed mood or loss of interest in activities, affecting daily functioning.

Conscientiousness

A personality trait characterized by being thorough, careful, or vigilant; entails a strong sense of duty and being responsible.

Determinism

The philosophical concept that every event or state of affairs, including every human decision and action, is the consequence of preceding events in accordance with the natural laws.