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

A	B	C	D	E	F	G
2
3		Ending Supplies inventory	$5,700
4		Unadjusted Supplies inventory	$8,500
5		December supplies expense	$2,800	=D4-D3
6
7		Adjusting entries for supplies will be as follows:
8
9		Account	Debit	Credit
10		Supplies Expense	$2,800
11		Supplies		$2,800
12
13		Adjusting entries for wage will be as follows:
14		Account	Debit	Credit
15		Wage Expense	$3,500
16		Wage payable		$3,500
17
18		Adjusting entry for Insurance expense:
19		Account	Debit	Credit
20		Insurance Expense	$8,600
21		Prepaid Insurance		$8,600
22
23		Adjusting entry for rent expense:
24		Account	Debit	Credit
25		Rent Expense	$2,250
26		Accounts Payable		$2,250
27
28		Adjusting entry for depreciation expense:
29		Account	Debit	Credit
30		Depreciation Expense	$8,000
31		Accumulated Depreciation		$8,000
32
33		Adjusting entry for interest expense:
34		Account	Debit	Credit
35		Interest Expense	$450
36		Interest Payable		$450
37
38		Adjusting entry for property tax:
39		Account	Debit	Credit
40		Property Tax Expense	$625
41		Property Tax Payable		$625
42
43		Adjusting Entry for utilities expense:
44		Account	Debit	Credit
45		Utilities Expense	$425
46		Accounts Payable		$425
47