Question

The unadjusted trial balance of Lakota Freight Co. at March 31, 20Y4, the end of the year, follows:

Lakota Freight Co.

UNADJUSTED TRIAL BALANCE

March 31, 20Y4

	ACCOUNT TITLE	DEBIT	CREDIT
1	Cash	12,000.00
2	Supplies	32,000.00
3	Prepaid Insurance	3,600.00
4	Equipment	100,000.00
5	Accumulated Depreciation-Equipment		25,000.00
6	Trucks	40,000.00
7	Accumulated Depreciation-Trucks		15,000.00
8	Accounts Payable		4,000.00
9	Common Stock		29,000.00
10	Retained Earnings		29,600.00
11	Dividends	15,000.00
12	Service Revenue		170,000.00
13	Wages Expense	46,000.00
14	Rent Expense	10,200.00
15	Truck Expense	9,000.00
16	Miscellaneous Expense	4,800.00
17	Totals	272,600.00	272,600.00

The data needed to determine year-end adjustments are as follows:

A.	Supplies on hand at March 31 are $7,000.
B.	Insurance premiums expired during year are $1,800.
C.	Depreciation of equipment during year is $8,550.
D.	Depreciation of trucks during year is $6,000.
E.	Wages accrued but not paid at March 31 are $500.

Required:

1.	For each account listed in the trial balance, enter the balance in the appropriate Balance column of a four-column account and select the check mark in the Post. Ref. column.
2.	(Optional) On your own paper or spreadsheet, enter the unadjusted trial balance on an end-of-period work sheet and complete the work sheet.
3.	a. Journalize the adjusting entries on Page 26 of the journal. Adjusting entries are recorded on March 31. Refer to the Chart of Accounts for exact wording of account titles. b. Post the adjusting entries to the ledger, inserting balances in the accounts affected.
4.	Prepare an adjusted trial balance.
5.	a. Prepare an income statement for the year ended March 31, 20Y4. If a net loss has been incurred, enter that amount as a negative number using a minus sign. Be sure to complete the statement heading. You will not need to enter colons (:) on the income statement. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. b. Prepare a statement of stockholders’ equity for the year ended March 31, 20Y4, additional common stock of $7,000 was issued. Be sure to complete the statement heading. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign. c. Prepare a balance sheet as of March 31, 20Y4. Be sure to complete the statement heading. Fixed assets must be entered in order according to account number. You will not need to enter colons (:) or the word "Less" on the balance sheet; they will automatically insert where necessary. Refer to the Chart of Accounts for exact wording of account titles. Refer to the lists of Labels and Amount Descriptions for exact wording of the answer choices for text entries other than account names. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
6.	a. Journalize the closing entries on page 27 of the journal. (Note: Complete the adjusted trial balance, the income statement, the statement of stockholders’ equity, and the balance sheet BEFORE completing part 6. a.) b. Post the closing entries, inserting balances in the accounts affected. Leave the ITEM column BLANK for each row except when entering an account balance in the first row. In that case, enter the word Balance in the ITEM column in the first row. If the account balance is zero (0) after closing entries are posted, enter a zero (0) in the account's normal balance column.
7.	Prepare a post-closing trial balance.

Answer 1

Adjustments Debit Credit Income Statement Debit Credit 25,000 1,800 Unadjusted TB Debit Credit 12,000 32,000 3,600 100,000 25,000 40,000 15,000 4,000 8,550 6,000 Lakota Freight Co. Account Names Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Trucks Accumulated Depreciation-Trucks Accounts Payable Wages Payable Common Stock Retained Earnings Dividends Service Revenue Wages Expense Rent Expense Truck Expense Supplies Expense Insurance Expense Depreciation Expense Miscellaneous Expense Totals Check Balance Sheet Debit Credit 12,000 7,000 1,800 100,000 33,550 40,000 21,000 4,000 500 29,000 29,600 15,000 500 Adjusted TB Debit Credit 12,000 7,000 1,800 100,000 33,550 40,000 21,000 4,000 500 29,000 29,600 15,000 170,000 46,500 10,200 9,000 25,000 1,800 14,550 4,800 287,650 287,650 29,000 29,600 15,000 170,000 170,000 500 46,000 10,200 9,000 25,000 1,800 14,550 46,500 10,200 9,000 25,000 1,800 14,550 4,800 111,850 58,150 170,000 4,800 272,600 272,600 41,85041,850 170,000 175,800 117,650 58,150 175,800 115,800 58.156 170,000 175,800

Lakota Freight Co. Journal entries No. Date Account A 31-Mar Supplies Expense Supplies Credit Post Ref Debit J26 $ 25,000 J26 Calculation =32,000-7,000 $ 25,000 $ 1,800 B 31-Mar Insurance Expense Prepaid Insurance J26 J26 $ 1,800 C $ 8,550 31-Mar Depreciation Expense J26 Accumulated Depreciation-Equipment J26 $ 8,550 D $ 6,000 31-Mar Depreciation Expense Accumulated Depreciation-Trucks J26 126 $ 6,000 $ 500 E 31-Mar Wages Expense Wages Payable J26 J26 $ 500

Lakota Freight Co. T Accounts Date Item Balance Credit Balance Credit Credit Debit Credit Debit Post Ref Debit Cash Date Item Post Ref Debit Supplies 31-Mar Balance 31-Mar Adjusting J26 31-Mar Balance $ 12,000 $ 12,000 $ 25,000 $ $ 32,000 7,000 Prepaid Insurance 31-Mar Balance 31-Mar Adjusting $ 1,800 $ $ 3,600 1,800 J26 Equipment 31-Mar Balance $100,000 $ 100,000 $ 25,000 $ 33,550 Trucks 31-Mar Balance $ 40,000 $ 40,000 $ 15,000 $ 21,000 Accounts Payable 31-Mar Balance $ 4,000 $ 4,000 $ $ - 500 Common Stock 31-Mar Balance $ 29,000 $ 29,000 $ 29,600 $ 87,750 $ 72,750 Dividends $170,000 31-Mar Balance 31-Mar $ 15,000 $ $15,000 S - J27 Wages Expense Accumulated Depreciation-Equipment 31-Mar Balance 31-Mar Adjusting J26 $ 8,550 Accumulated Depreciation-Trucks 31-Mar Balance 31-Mar Adjusting 126 $ 6,000 Wages Payable 31-Mar Balance ✓ 31-Mar Adjusting J26 $ 500 Retained Earnings 31-Mar Balance ✓ 31-Mar J27 $ 58,150 31-Mar J27 $ 15,000 Service Revenue 31-Mar Balance 31-Mar J27 $ 170,000 Rent Expense 31-Mar Balance ✓ $ 10,200 31-Mar J27 $ 10,200 $ - $ - Supplies Expense 31-Mar Balance 31-Mar Adjusting J26 $ 25,000 $ 25,000 31-Mar $ 25,000 $ Depreciation Expense 31-Mar Balance $ - 31-Mar Adjusting J26 $ 8,550 $ 8,550 31-Mar Adjusting J26 $ 6,000 $ 14,550 31-Mar $ 14,550 $ - Income Summary 31-Mar Balance 31-Mar J27 $ 170,000 31-Mar J27 $ 111,850 31-Mar J27 $ 58,150 31-Mar Balance 31-Mar Adjusting 31-Mar 500 J26 $ J27 Truck Expense $ 46,000 $ 46,500 $ - $ 46,500 9,000 $ 31-Mar Balance 31-Mar $ $ J27 $ 9,000 J27 Insurance Expense 31-Mar Balance 31-Mar Adjusting 31-Mar $ 1,800 J26 J27 $ $ $ $ . 1,800 - - $ 1,800 J27 Miscellaneous Expense 31-Mar Balance 31-Mar $ $ 4,800 - J27 $ 4,800 $ 170,000 $ 58,150 $ -

170,000 Lakota Freight Co. Income Statement For the Year Ended March 31, 2014 Service Revenue Expenses Wages Expense Rent Expense Truck Expense Supplies Expense Insurance Expense Depreciation Expense Miscellaneous Expense Total Expenses Net Income 46,500 10,200 9,000 25,000 1,800 14,550 4,800 111,850 58,150

Lakota Freight Co. Statement of Stockholders Equity For the Year Ended March 31, 2014 Common Stock Retained Earnings Total Equity Balance, April 1, 20Y3 22,000 29,600 51,600 Issue of common stock 7,000 7,000 Net Income 58,150 58,150 Dividends (15,000) (15,000) Balance, March 31, 2014 29,000 72,750 101,750

Lakota Freight Co. Balance Sheet As of March 31, 2014 Assets Current Assets Cash Supplies Prepaid Insurance Total Current Assets 12,000 7,000 1,800 20,800 66,450 Property, Plant & Equipment Equipment Accumulated Depreciation Equipment Trucks Accumulated Depreciation-Trucks Total Property, Plant & Equipment Total Assets 100,000 (33,550) 40,000 (21,000) 19,000 85,450 106,250 Liabilities & Stockholders Equity Liabilities Accounts Payable Wages Payable Total Liabilities 4,000 500 4,500 Stockholders Equity Common Stock Retained Earnings Total Stockholders Equity Total Liabilities & Stockholders Equity 29,000 72,750 101,750 106,250

Closing entries 31-Mar Service Revenue Income Summary 127 $ 170,000 J27 $ 170,000 J27 $ 111,850 J27 31-Mar Income Summary Wages Expense Rent Expense Truck Expense Supplies Expense Insurance Expense Depreciation Expense Miscellaneous Expense $ $ $ $ $ $ $ 46,500 10,200 9,000 25,000 1,800 14,550 4,800 J27 J27 $ 58,150 31-Mar Income Summary Retained Earnings J27 J27 $ 58,150 $ 15,000 31-Mar Retained Earnings Dividends J27 J27 $ 15,000

Lakota Freight Co. Account Names Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation-Equipment Trucks Accumulated Depreciation-Trucks Accounts Payable Wages Payable Common Stock Retained Earnings Totals Post Closing TB Debit Credit 12,000 7,000 1,800 100,000 33,550 40,000 21,000 4,000 500 29,000 72,750 160,800 160,800