C1. Gulf Coast Drilling Company provides services for drilling operations off the coast of Louisiana. The company has a significant amount of debt to National Bank of New Orleans. The bank requires the company to provide it with quarterly financial state- ments. Explain what is involved in preparing financial statements every quarter.
C2. Pamela Turnbow, owner of Turnbow Fashions Company, notices the amount of time it takes the company’s accountant to prepare closing entries. She suggests that the company could save time and money by not doing closing entries. She argues that only adjusting entries are needed to determine the company’s earnings. Explain the purposes of closing entries and why they are worth doing.
Gulf Coast Corporation is a successful oil and gas exploration business in the southwestern United States.