Question

Part 2:

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 $50,500, 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.

Answer 1

Particulars		Unadjusted Trial Balance		Adjustments		Adjusted Trial Balance
Account	Title	Debit	Credit	Debit	Credit	Debit	Credit
101	Cash	15,000				15,000	-
126	Supplies	8,500			2,800	5,700	-
128	Pre paid insurance	11,200			8,600	2,600	-
167	Equipment	175,000				175,000	-
168	Acc Depreciation - Equipment		19,000		8,000	-	27,000
201	Accounts Payable		9,250			-	9,250
251	Long term notes payable		45,000			-	45,000
301	Shareholders equity		106,900			-	106,900
302	Dividends	15,750				15,750	-
401	Construction revenue		153,000			-	153,000
623	Wage expenses	61,800		3,500		65,300	-
633	Interest expenses	6,250		450		6,700	-
640	Rent expenses	15,750		2,250		18,000	-
683	Property Tax expenses	12,500		625		13,125	-
684	Repairs expenses	6,100				6,100	-
690	Utilities expenses	5,300		425		5,725	-
	Insurance expense			8,600		8,600	-
	Depreciation			8,000		8,000	-
	Accrued expenses (3500+2250+450+625+425)				7,250	-	7,250
	Supplies			2,800		2,800
		333,150	333,150	26,650	26,650	348,400	348,400

Profit and Loss A/c
Particulars	Debit	Credit
Construction revenue		153,000
Wage expenses	65,300
Interest expenses	6,700
Rent expenses	18,000
Property Tax expenses	13,125
Repairs expenses	6,100
Utilities expenses	5,725
Insurance expense	8,600
Depreciation	8,000
Supplies	2,800
Profit for the year	18,650
	153,000	153,000

Balance Sheet
Particulars	Debit	Credit
Cash	15,000
Supplies	5,700
Pre paid insurance	2,600
Equipment	175,000
Acc. Depreciation - Equipment		27,000
Accounts Payable		9,250
Long term notes payable		45,000
Shareholders equity		125,550
Accrued expenses		7,250
Proposed Dividend	15,750
	214,050	214,050

	Equity A/c
Particulars (Dr)	Amount	Particulars (Cr.)	Amount
		By opening balance	50,500
		By cash	45000
		By profit	18,650
		By reserves	11,400
To Closing Balance	125,550
	125,550		125,550