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The following unadjusted trial balance is for Groenke Construction Company as of year-end for the December...

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.
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Homework Answers

Answer #1

Journal Entries for Adjusting Entries:

Journal Entries for Adjusting Entries Account Entry 1 Supplies expense Supplies To record supplies expense for the year) Debit Credit $ 2,800 (8500 5700) $ 2,800 Entry 2 Wage expense Wages payable To record wages accrued but not paid) 3,500 $ 3,500 Entry 3 Insurance expense Prepaid Insurance (To record part of prepaid insurance expired) $ 8,600 $ 8,600 Entry 4 Rent expense Rent payable (To record rent expense not yet paid but accrued) $ 2,250 $ 2,250

Journal Entries for Adjusting Entries:

Entry 5 Depreciation expense8,000 Accumulated depreciation- equipment (To record depreciation expense for the year on equipment) 8,000 Entry 6 Interest expense Interest payable To record interest expense not yet paid but accrued) $ 450 $ 450 Entry 7 Property taxes Property taxes payable To record property tax assessed but not yet paid) $ 625 $ 625 Entry 8 Utilities expense Utilities payable To record utilities expense not yet paid but accrued) S 425 $ 425

Adjusted Trial Balance with Adjustments

Account Title Trial Balance Credit Adjustments Debit Adjusted Trial Balance Debit $ 15,000 $ 8,500 $ 11,200 $ 1,75,000 Credit Debit Credit $ 15,000 $ 2,800 5,700 $8,600 2,600 $ 1,75,000 Cash Supplies Prepaid Insurance Equipment Accumulated Depreciation - Equipment Accounts payable Long term notes payable Wages payable Rent payable Interest payable Property tax payable Utilities payable Shareholders equity Dividends Construction Revenue Wage expense Interest expense $ 19,000 $ 9,250 $ 45,000 $ 8,000 3,500 $ 2,250 s 450 $ 625 s 425 $ 27,000 $ 9,250 $ 45,000 $ 3,500 $ 2,250 450 $62!5 c 425 $ 1,06,900 $1,06,900 $ 15,750 $ 15,750 $1,53,000 $ 1,53,000 $ 61,800 $6,250 3,500 S 450 S 65,300 $ 6,700

Adjusted Trial Balance with Adjustments:

Account Title Trial Balance Credit Debit $ 15,750 $ 12,500 $ 6,100 $ 5,300 Adjustments Adjusted Trial Balance Debit $ 2,250 $ 625 Credit Debit Credit Rent expense Property tax expense Repairs expense Utilities expense Supplies expense Insurance expense Depreciation expense Totals $ 18,000 S 13,125 $ 6,100 $ 5,725 $ 2,800 $ 8,600 $ 8,000 $3,48,400 3,48,400 s 425 $ 2,800 $ 8,600 $ 8,000 $ 3,33,150 $3,33,150

Income Statement:

Groenke Construction Company Income Statement For the year ended December 31, 20X7 6 2 Construction Revenue $1,53,000 Less: Expenses Wage expense Interest expense Rent expense 65,300 $ 6,700 $ 18,000 Property tax expenseS 13,125 $ 6,100 $ 5,725 $ 2,800 $ 8,600 Repairs expense Utilities expense Supplies expense Insurance expense Depreciation expense8,000 Net Income 18,650

Statement of Shareholders Equity:

Groenke Construction Company Shareholders Equity For the year ended December 31, 20X7 Total Retained Shareholders Commorn Stock $50,500 $ 45,000 Earnings Equity Opening Balance Issue of common shares Net Income Less: Dividends Total 11,400 $ 61,900 18,650 $ 18,650 14,300$ 1,09,800 45,000 S(15,750) $ (15,750) $ (15,750)S $95,500 We derived the opening balance for retained earnings by this method The question specifies that the opening balance of shareholders equity $50,500 and the additional issue of common shares = $ 45,000 So total shareholders equity is supposed to be $ 95,500 but if the figure in the balance sheet is $ 106,900, which means that there is opening balance of retained earnings We are assuming it to be retained earnings, and the figure can be calculated by 106,900 45,000 50,500 $11,400

Balance Sheet:

Groenke Construction Company Balance Sheet December 31, 20X7 Assets: Current Assets Cash Supplies Prepaid Insurance Total current assets $ 15,000 $ 5,700 $ 2,600 $23,300 Property, plant & equipment Equipment Less: Accumulated Depreciation Equipment Total Property, plant & equipment $1,75,000 $ 27,000 $1,48,000 $1,71,300 Total assets

Balance sheet:

Liabilities Current Liabilities Accounts Payable Wages payable Rent payable Interest payable Property tax payable Utilities payable Total current liabilities $ 9,250 $ 3,500 $ 2,250 S 450 $625 425 $ 16,500 Long term liabilities Long term notes payable $ 45,000 Stockholders equity Common stock Retained earnings Total Stockholders equity$1,09,800 $ 95,500 $ 14,300 Total Liabilities and stockholders equity $1,71,300

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