4-5A The following unadjusted trial
balance is for Adams Construction Co. as of the end of its 2005 fiscal year.
The June 30, 2004, credit balance of the owner’s capital account was $52,660,
and the owner invested $25,000 cash in the company during the 2005 fiscal year.
|
|
Unadjusted
Trial Balance
|
Adjustments
|
Adjusted
Trial Balance
|
Income
Statement
|
Balance
Sheet & Statement of Owner's Equity
|
||||||
|
No.
|
Account
Title
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
|
101
|
Cash
|
$17,500
|
|
|
(b)
3,900
|
$13,600
|
|
|
|
$13,600
|
|
|
126
|
Supplies
|
8,900
|
|
|
(a)
3,200
|
5,700
|
|
|
|
5,700
|
|
|
128
|
Prepaid
insurance
|
6,200
|
|
6,200
|
|
|
|
6,200
|
|
||
|
167
|
Equipment
|
131,000
|
|
|
|
131,000
|
|
|
|
131,000
|
|
|
168
|
Accumulated
depreciation—Equipment
|
|
25,250
|
|
© 8,500
|
|
33,750
|
|
|
|
33,750
|
|
201
|
Accounts
payable
|
|
5,800
|
|
(d) 550
|
6,350
|
|
|
|
6,350
|
|
|
203
|
Interest
payable
|
|
0
|
(h) 240
|
|
240
|
|
240
|
|
240
|
|
|
208
|
Rent
payable
|
|
0
|
|
(f) 200
|
|
200
|
|
|
|
|
|
210
|
Wages
payable
|
|
0
|
(e)
1,600
|
|
1600
|
1600
|
|
|
|
|
|
212
|
Additional
property Taxes
|
|
|
(g) 900
|
|
900
|
|
|
|
|
|
|
213
|
Property
taxes payable
|
|
0
|
|
|
|
|
|
|
|
|
|
251
|
Long-term
notes payable
|
|
24,000
|
|
(i) 5000
|
|
29,000
|
|
|
|
29,000
|
|
301
|
S.
Adams, Capital
|
|
77,660
|
|
|
|
77,660
|
|
|
|
77,660
|
|
302
|
S.
Adams, Withdrawals
|
30,000
|
|
|
|
30,000
|
|
|
|
30,000
|
|
|
401
|
Construction
fees earned
|
|
134,000
|
|
|
|
134,000
|
|
134,000
|
|
|
|
501
|
Long-term
notes expense
|
|
|
(i) 5000
|
|
5,000
|
|
5,000
|
|
|
|
|
612
|
Depreciation
expense—Equipment
|
0
|
|
(c 8,500
|
|
8,500
|
|
8,500
|
|
|
|
|
623
|
Wages
expense
|
$45,860
|
|
(e)
1,600
|
47,460
|
|
47,460
|
|
|
|
|
|
633
|
Interest
expense
|
2,640
|
|
|
(h) 240
|
2,880
|
|
2,880
|
2,880
|
|
|
|
637
|
Insurance
expense
|
0
|
|
(b)
3,900
|
3,900
|
|
3,900
|
|
|
|
|
|
640
|
Rent
expense
|
13,200
|
|
(f) 200
|
|
13,400
|
|
13,400
|
|
|
|
|
652
|
Supplies
expense
|
0
|
|
(a)
3,200
|
|
3,200
|
|
3,200
|
|
|
|
|
682
|
Additional
property Taxes
|
|
|
(g) 900
|
|
900
|
|
900
|
|
|
|
|
683
|
Property
taxes expense
|
4,600
|
|
|
|
4,600
|
|
4,600
|
|
|
|
|
684
|
Repairs
expense
|
2,810
|
|
|
|
2,810
|
|
2,810
|
|
|
|
|
690
|
Utilities
expense
|
4,000
|
|
(d) 550
|
4,550
|
|
4,550
|
|
|
|
|
|
Totals
|
$266,710
|
$266,710
|
$24,090
|
$ 24,090
|
$ 283,700
|
$ 283,700
|
$
98,800
|
$137,120
|
$186,500
|
$
147,000
|
|
|
Net
Income
|
|
|
|
|
|
|
38,320
|
|
|
38,320
|
|
|
Totals
|
|
|
|
|
|
|
$137,120
|
$137,120
|
$186,500
|
$
185,320
|
|
Required
1. Prepare a 10-column work sheet
for fiscal year 2005, starting with the unadjusted trial balance and including
adjustments based on these additional facts:
a. The supplies available at the end
of fiscal year 2005 had a cost of $3,200.
b. The cost of expired insurance for
the fiscal year is $3,900.
c. Annual depreciation on equipment
is $8,500.
d. The June utilities expense of
$550 is not included in the unadjusted trial balance because the bill arrived
after the trial balance was prepared. The $550 amount owed needs to be
recorded.
e. The company’s employees have
earned $1,600 of accrued wages at fiscal year-end.
f. The rent expense incurred and not
yet paid or recorded at fiscal year-end is $200.
g. Additional property taxes of $900
have been assessed for this fiscal year but have not been paid or recorded in
the accounts.
h. The long-term note payable bears interest
at 1% per month. The unadjusted Interest Expense account equals the amount paid
for the first 11 months of the 2005 fiscal year. The $240 accrued interest for
June has not yet been paid or recorded. (Note that the company is required to make
a $5,000 payment toward the note payable during the 2006 fiscal year.)
2. Use the work sheet to enter the
adjusting and closing entries; then journalize them.
3. Prepare the income statement and
the statement of owner’s equity for the year ended June 30 and the classified
balance sheet at June 30, 2005.
Analysis Component
4. Analyze the following separate
errors and describe how each would affect the 10-column work sheet. Explain
whether the error is likely to be discovered in completing the work sheet and,
if not, the effect of the error on the financial statements.
a. Assume that the adjustment for supplies
used consisted of a credit to Supplies for $3,200 and a debit for $3,200 to
Supplies Expense.
b. When the adjusted trial balance
in the work sheet is completed, the $17,500 Cash balance is incorrectly entered
in the Credit column.
Check (3) Total
assets, $120,250; Current liabilities, $14,290; Net income, $39,300
SOLUTION PREVIEW
|
ADAMS CONSTRUCTION
CO.
|
|||||||||||||
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Work Sheet
|
|||||||||||||
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For Year Ended June
30, 2011
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|
|
Balance Sheet &
|
|
|
|
|
Unadjusted
|
|
|
Adjusted
|
Income
|
Statement of
|
||||||
|
|
|
Trial
Balance
|
Adjustments
|
Trial
Balance
|
Statement
|
Owner’s
Equity
|
|||||||
|
No.
|
Account
Title
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
Dr.
|
Cr.
|
||
|
101
|
Cash
|
17,500
|
|
|
|
|
|
17,500
|
|
|
|
17,500
|
|
|
126
|
Supplies
|
8,900
|
|
|
|
(a)
|
5,700
|
3,200
|
|
|
|
3,200
|
|
|
128
|
Prepaid insurance
|
6,200
|
|
|
|
(b)
|
3,900
|
2,300
|
|
|
|
2,300
|
|
|
167
|
Equipment
|
131,000
|
|
|
|
|
|
131,000
|
|
|
|
131,000
|
|
File
name: Adams-Construction-Co.xls
File type: XLS Price: $15
