Question

The following unadjusted trial balance is for Ace Construction Co. as of the end of its 2019 fiscal year. The June 30, 2018, credit balance of the owner’s capital account was $57,800, and the owner invested $25,000 cash in the company during the 2019 fiscal year.

ACE CONSTRUCTION CO. Unadjusted Trial Balance June 30, 2019
No.	Account Title	Debit				Credit
101	Cash	$	17,500
126	Supplies		9,500
128	Prepaid insurance		5,500
167	Equipment		141,780
168	Accumulated depreciation—Equipment					$	27,000
201	Accounts payable						5,000
203	Interest payable						0
208	Rent payable						0
210	Wages payable						0
213	Property taxes payable						0
251	Long-term notes payable						22,000
301	V. Ace, Capital						82,800
302	V. Ace, Withdrawals		30,000
401	Construction fees earned						141,000
612	Depreciation expense—Equipment		0
623	Wages expense		46,000
633	Interest expense		2,420
637	Insurance expense		0
640	Rent expense		14,000
652	Supplies expense		0
683	Property taxes expense		4,100
684	Repairs expense		2,700
690	Utilities expense		4,300
	Totals	$	277,800			$	277,800

Adjustments:

1. The supplies available at the end of fiscal year 2019 had a cost of $3,420.
2. The cost of expired insurance for the fiscal year is $3,465.
3. Annual depreciation on equipment is $8,600.
4. The June utilities expense of $580 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $580 amount owed needs to be recorded.
5. The company’s employees have earned $1,000 of accrued and unpaid wages at fiscal year-end.
6. The rent expense incurred and not yet paid or recorded at fiscal year-end is $300.
7. Additional property taxes of $600 have been assessed for this fiscal year but have not been paid or recorded in the accounts.
8. The $220 accrued interest for June on the long-term notes payable has not yet been paid or recorded.

Required:
1. Prepare a 10-column work sheet for fiscal year 2019, starting with the unadjusted trial balance and including adjustments based on the additional facts. The June 30, 2018, credit balance of the owner’s capital account was $57,800, and the owner invested $25,000 cash in the company during the 2019 fiscal year.
2a. Prepare the adjusting entries. (all dated June 30, 2019).
2b. Prepare the closing entries. (all dated June 30, 2019):
3a. Prepare the income statement for the year ended June 30, 2019.
3b. Prepare the statement of owner's equity for the year ended June 30, 2019.
3c. Prepare the classified balance sheet at June 30, 2019.

Answer 1

1]		Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance		Income Summary		Balance Sheet
		Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit	Debit	Credit
	Cash	$          17,500				$          17,500				$          17,500
	Supplies	$             9,500			$           6,080	$            3,420				$            3,420
	Prepaid insurance	$             5,500			$           3,465	$            2,035				$            2,035
	Equipment	$        141,780				$        141,780				$       141,780
	Accumulated depreciation-Equipment		$           27,000		$           8,600		$         35,600				$       35,600
	Accounts payable		$              5,000		$                  -		$           5,000				$         5,000
	Interest payable		$                     -		$              220		$               220				$             220
	Rent payable				$              300		$               300				$             300
	Wages payable		$                     -		$           1,000		$            1,000				$         1,000
	Utilities payable				$              580		$               580				$             580
	Property taxes payable				$              600		$               600				$             600
	Long term notes payable		$           22,000				$         22,000				$       22,000
	V.Ace, Capital		$           82,800				$         82,800				$       99,435
	V.Ace, Drawings	$            30,000				$          30,000
	Construction fees earned		$         141,000				$       141,000		$     141,000
	Depreciation expense-Equipment	$                   -		$              8,600		$            8,600		$           8,600
	Wages expense	$          46,000		$              1,000		$          47,000		$        47,000
	Interest expense	$            2,420		$                 220		$            2,640		$           2,640
	Insurance expense			$              3,465		$            3,465		$           3,465
	Rent expense	$          14,000		$                 300		$          14,300		$        14,300
	Supplies expense	$                   -		$              6,080		$            6,080		$           6,080
	Property taxes expense	$            4,100		$                 600		$            4,700		$           4,700
	Repaires expense	$            2,700				$            2,700		$           2,700
	Utilities expense	$            4,300		$                 580		$            4,880		$           4,880
		$        277,800	$         277,800	$           20,845	$        20,845	$       289,100	$       289,100	$        94,365	$     141,000	$       164,735	164735
	Net income							$        46,635
								$      141,000	$     141,000

3a]	INCOME STATEMENT
	Construction fees earned		$         141,000
	Expenses:
	Depreciation expense-Equipment	$            8,600
	Wages expense	$          47,000
	Interest expense	$            2,640
	Insurance expense	$            3,465
	Rent expense	$          14,300
	Supplies expense	$            6,080
	Property taxes expense	$            4,700
	Repaires expense	$            2,700
	Utilities expense	$            4,880
	Total expenses		$           94,365
	Net income		$           46,635
3b]	STATEMENT OF CHANGES IN OWNER'S EQUITY
	V.Ace, Capital, beginning balance		$           57,800
	Add: Capital brought in	$          25,000
	Add: Net income for the year	$          46,635
	Less: Drawings	$          30,000
	Net addition		$           41,635
	V.Ace, Capital, ending balance		$           99,435
3c]	BALANCE SHEET
	Assets
	Current assets:
	Cash	$          17,500
	Supplies	$            3,420
	Prepaid insurance	$            2,035
	Total current assets		$           22,955
	Non-current assets:
	Eauipment	$        141,780
	Accumulated depreciation-Equipment	$          35,600
	Total non-current assets		$         106,180
	Total assets		$         129,135
	Total liabilities and Owners' Equity
	Current liabilities:
	Accounts payable	$            5,000
	Interest payable	$                220
	Rent payable	$                300
	Wages payable	$            1,000
	Utilities payable	$                580
	Property taxes payable	$                600
	Total current liabilities		$             7,700
	Non-current liabilities-LT Notes		$           22,000
	Total liabilities		$           29,700
	R.Bok, Capital		$           99,435
	Total liabilities and owners' equity		$         129,135