Question

The following unadjusted trial balance is for Groenke Construction Company as of year-end for the December 31, 20x7 fiscal year. The December 31, 20x6 credit balance of the stockholders’ equity account is $61,900, and the stockholders invested $45,000 cash in the company during 20x7.

1. Account Title Debit                     Credit

101         Cash                                                      $15,000

126         Supplies                                               $8,500

128         Pre-paid insurance                          $11,200

167         Equipment                                          $175,000

168         Accumulated depreciation – equipment                 $19,000

201         Accounts payable                                                               $9,250

251         Long-term notes payable                                               $45,000

301         Shareholders’ equity                                                      $106,900

302         Dividends                                            $15,750

401         Construction Revenue                                                   $153,000

623         Wage expense                                  $61,800

633         Interest expense                               $6,250

640         Rent expense                                    $15,750

683         Property tax expense                    $12,500

684         Repairs expense                                $6,100

690         Utilities expense                                $5,300

TOTALS                                                            $333,150                  $333,150

Instructions:

Use the template provided to:

1. Journalize the following adjusting entries as of fiscal year-end December 31, 20x7.
2. Post the adjusting entries to an unadjusted trial balance and prepare the adjusted trial balance.
3. Create financial statements, namely: i) the income statement, ii) statement of stockholders’ equity, and iii) the balance sheet for 20x7.

Adjustments needed:

1. The supplies available at the end of the fiscal year 20x7 are at a cost of $5,700.
2. The company's employees have earned $3.500 in accrued wages for the fiscal year.
3. The cost of expired insurance for the fiscal year is $8,600.
4. The rent expense not yet paid or recorded in the fiscal year is $2,250.
5. Annual depreciation on equipment is $8,000; no other depreciation adjustment was made in 20x7.
6. The $450 accrued interest for December has not yet been paid and reported.
7. Additional property taxes of $625 have been assessed for the fiscal year but have not yet been paid or recorded in the accounts.
8. The December utilities expense of $425 is not included in the adjusted trial balance, because the bill arrived after the trial balance was prepared. The $425 amount owed needs to be recorded.
9. The company paid dividends of $15,575 to its shareholders on record.

Answer 1

Adjusting Entries
Transactions	Particulars			Debit	Credit
1)	Supplies Expense			$ 2,800.00
	To Supplies				$ 2,800.00
	($ 8500 - $ 5700)
2)	Wages Expense			$ 3,500.00
	To Wages Payable				$ 3,500.00
3)	Insurance Expense			$ 8,600.00
	To Prepaid Insurance				$ 8,600.00
4)	Rent Expense			$ 2,250.00
	To Accounts Payable				$ 2,250.00
5)	Depreciation Expense			$ 8,000.00
	To Accumulated Depreciation				$ 8,000.00
6)	Interest Expense			$    450.00
	To Interest Payable				$    450.00
7)	Property Tax Expense			$    625.00
	To Property Tax Payable				$    625.00
8)	Utilities Expense			$    425.00
	To Accounts Payable				$    425.00

			Unadjusted			Adjustments			Adjusted
Particulars			Debit	Credit		Debit	Credit		Debit	Credit
Cash			$    15,000.00			$      175.00			$    15,175.00
Supplies			$      8,500.00				$   2,800.00		$      5,700.00
Prepaid Insurance			$    11,200.00				$   8,600.00		$      2,600.00
Equipment			$ 1,75,000.00						$ 1,75,000.00
Accumulated Depreciation				$    19,000.00			$   8,000.00			$    27,000.00
Accounts Payable				$      9,250.00			$   2,675.00			$    11,925.00
Long Terms Notes Payable				$    45,000.00						$    45,000.00
Wages Payable							$   3,500.00			$      3,500.00
Interest Payable							$      450.00			$         450.00
Property Tax Payable							$      625.00			$         625.00
Dividends Payable							$      175.00			$         175.00
Shareholder's Equity				$ 1,06,900.00						$ 1,06,900.00
Dividends			$    15,750.00						$    15,750.00
Construction Revenue				$ 1,53,000.00						$ 1,53,000.00
Wages Expense			$    61,800.00			$   3,500.00			$    65,300.00
Interest Expense			$      6,250.00			$      450.00			$      6,700.00
Rent Expense			$    15,750.00			$   2,250.00			$    18,000.00
Property Tax Expense			$    12,500.00			$      625.00			$    13,125.00
Repairs Expense			$      6,100.00						$      6,100.00
Utilities Expense			$      5,300.00			$      425.00			$      5,725.00
Supplies Expense						$   2,800.00			$      2,800.00
Insurance Expense						$   8,600.00			$      8,600.00
Depreciation Expense						$   8,000.00			$      8,000.00
Total			$ 3,33,150.00	$ 3,33,150.00		$ 26,825.00	$ 26,825.00		$ 3,48,575.00	$ 3,48,575.00

	Income Statement
	Construction Revenue				$ 1,53,000.00
	Expenses:
	Wages Expense			$ 65,300.00
	Interest Expense			$   6,700.00
	Rent Expense			$ 18,000.00
	Property Tax Expense			$ 13,125.00
	Repairs Expense			$   6,100.00
	Utilities Expense			$   5,725.00
	Supplies Expense			$   2,800.00
	Insurance Expense			$   8,600.00
	Depreciation Expense			$   8,000.00
	Total Expenses				$ 1,34,350.00
	Net Income				$    18,650.00
	Statement of Stockholder's Equity
	Beginning Balance				$    61,900.00
Add:	Net Income				$    18,650.00
Add:	Additional investment				$    45,000.00
Less:	Dividends				$    15,750.00
	Ending Balance				$ 1,09,800.00

Balance Sheet
	Assets
Cash				$    15,175.00
Supplies				$      5,700.00
Prepaid Insurance				$      2,600.00
Equipment			$ 1,75,000.00
Accumulated Depreciation			$    27,000.00	$ 1,48,000.00
Total Assets				$ 1,71,475.00
	Liabilities
Accounts Payable				$    11,925.00
Long Terms Notes Payable				$    45,000.00
Wages Payable				$      3,500.00
Interest Payable				$         450.00
Property Tax Payable				$         625.00
Dividends Payable				$         175.00
Total Liabilities				$    61,675.00
	Equity
Shareholder's Equity				$ 1,09,800.00
Total Liabilities and Shareholder's Equity				$ 1,71,475.00