Question

Accounting Closing Problem for Adams Corp.

Group 2 - ADAMS CORPORATION

In reviewing the initial trial balance, it is clear that adjustments must be made before the adjusted

trial balance will be correct.

Deferred Accounts:

1. Six percent of the sales revenues are funds received for products to be delivered in 2017.

2. Insurance costs of $3000 which were shown as prepaid expenses in the unadjusted trial balance provided coverage for 2016.

3. Equipment has been used to generate revenues. The company estimates $4000 in depreciation for 2016.

Depreciation is entered only at year end at the time of the adjusting entries.

Accrued Accounts

4. Wages have been paid through December 28th. The seven employees worked December 29, 30 and 31.

and each earned $2000 per day.

5. An extra telephone line was installed in December. The telephone bill for $1900 including hookup and usage charges

was received on February 4th, 2017.

6. Interest accrues on the short term notes payable at an annual rate of 12 percent. The principal

has been outstanding all month. Interest expense has been accounted for through November 30, 2016

Interest on other debt has been paid at December 31, 2016.

7. The estimated income tax rate is 98%.

Unadjusted Trial Balance At 12/31/16 Only Adam's Corp 2 Corporation Name ADAMS GROUP BY LAST NAME Accounts payable 26000 Accounts receivable 35000 Accrued expenses payable 18000 Accumulated depreciation 14000 Cash 3000000 Common Stock 20000 Cost of goods sold 325000 Current maturities on long term debt 5000 Depreciation expense 23000 Equipment 250000 Administrative expense 15000 Income tax expense 0 Income taxes payable 12000 Political expenses 1600 Interest expense 2500 Insurance Expense Interest income 16000 Land 3200000 Long term debt 21000 Long term investments 6000 Bonds Payable 36000 Marketable securities 5600000 N/A 0 Prepaid expenses 12300 Retained earnings 7742742 Sales revenues 4500000 Shares Outstanding 5000 Short Notes Payable 74658 Unearned revenues 88000 Utilities expense 38000 Wages expense 65000 Shares Outstanding 5000

Answer 1