Question

Financial Statement Homework #1 Name(s) The purpose of this project is to apply the principles of accrual accounting in a real-world setting and construct an adjusted balance sheet and income statement that can be used to communicate the economic activity and financial condition of the firm. Specifically, this exercise requires you to record adjusting journal entries based on information provided, post these entries to t-accounts, construct an adjusted trial balance based on these adjustments, and finally construct a classified balance sheet and multi-step income statement from the adjusted trial balance. Points will be awarded based on accuracy of the adjusting journal entries and the financial statements produced. Housewell Contractors, Inc December 31, 2019 Unadjusted Trial balance 42,600 20,000 2,300 18,000 10,000 25,000 220,000 110,000 8,000 17,200 24,600 1,300 Cash Accounts Receivable Supplies on Hand Prepaid Insurance Inventory Vehicle Equipment Accumulated Depreciation Accounts Payable Unearned Revenue Wages Payable | Interest Payable Dividend Payable Long-Term Notes Payable Common Stock Retained Earnings (1/1/19) Dividends Sales COGS Delivery Expense Depreciation Expense Rent Expense Insurance Expense Wages Expense Supplies Expense Interest Expense Income Tax Expense Total 40,000 44,700 54,500 7,200 582,000 235,000 5,000 26,200 54,000 10,000 193,000 8,000 6,000 882,300 882,300

Answer 1

Credit Debit 4,500 59 Date Account title & explanation 31-Dec Insurance expense (18000*3/12) Prepaid insurance (To record expired insurance) 4,500 62 25,000 31-Dec Depreciation Expense Accumulated Depreciation (To record depreciation expense) 25,000 1,600 31-Dec Supplies expense (2300 - 700) Supplies (To record supplies consumed during the Year) 1,600 70 8,700 31-Dec Unearned Revenue(17200-8500) Sales (To record revenue earned during the Year) 8,700 74 2000 31-Dec Interest Expense (40000*5%) Interest Payable (To record accrued interest expense) 2000 78 18,000 31-Dec Accounts receivable Sales (To record merchandisesold during the year) 18,000

8300 Cost of Goods Sold Inventory (To record cost of inventory sold) 8300 Cash 13000 13000 Accounts receivable (To record collection from accounts receivable) 89 6600 31-Dec Dividends Dividend Payable (to record declaration of dividend) 6600 T-Accounts Prepaid Insurance 18000 4,500 Insurance expense 10000 4.500 14,500 Depreciation Expense 26200 25,000 51,200 Accumulated Depreciation 110000 25,000 135,000 13,500 99 100 Supplies on Hand 2300 1,600 Unearned Revenue 17200 8,700 102 Supplies expense 8000 1,600 9,600 Sales 582000 8,700 18,000 608,700 103 700 8,500 104

Interest Expense 2000 Interest Payable 1300 2000 Accounts receivable 20000 13000 18,000 Cost of Goods Sold 235000 8300 106 107 108 109 110 111 112 113 2000 3300 25,000 243300 Inventory 10000 Dividend Payable 6600 8300 Cash 42600 13000 55600 Dividends 7200 6600 13800 114 1700 6600 115 116

117 118 119 120 121 Housewell Contractors Inc. December 31,2019 Adjusted Trial Balance 55,600 25,000 700 13,500 1,700 25,000 220,000 123 125 127 128 129 Cash Accounts Receivable Supplies on Hand Prepaid Insurance Inventory Vehicle Equipment Accumulated Depreciation Accounts Payable Unearned Revenue Wages Payable Interest Payable Dividend Payable Long term Notes Payable Common Stock Retained Earnings (1/1/2019) Dividends Sales Cost of Goods Sold Delivery expense Depreciation expense Rent expense 131 135,000 8,000 8,500 24,600 3,300 6,600 40,000 44,700 54,500 133 135 13,800 136 137 608,700 139 140 243,300 5,000 51,200 54,000 141

142 143 144 145 146 147 Insurance expense Wages expense Supplies Expense Interest expense Income Tax expense Total 14,500 193,000 9,600 2,000 6,000 933,900 933,900 148

Housewell Contractors Inc. Income Statement For the Year Ended December 31, 2019 608,700 243,300 365,400 156 157 Revenue Sales Cost of Goods Sold Gross Profit Operating Expenses Delivery expense Depreciation expense Rent expense Insurance expense Wages expense Supplies Expense Total Operating Expenses Other Revenues (expenses) Interest expense Net Income before Income Tax Income Tax expense Net Income 5,000 51,200 54,000 14,500 193,000 9,600 160 161 162 164 165 166 167 168 169 327,300 38,100 2,000 36,100 6,000 30,100

171 172 Housewell Contractors Inc. Classified Balance Sheet As on December 31, 2019 173 174 175 176 55,600 25,000 700 13,500 1,700 178 Assets Current Assets Cash Accounts Receivable Supplies on Hand Prepaid Insurance Inventory Total Current Assets Property, Plant & Equipment Vehicle Equipment Accumulated Depreciation Total Assets 179 180 96,500 181 182 183 184 25,000 220,000 (135,000) 110,000 206,500 185

186 187 188 189 190 191 8,000 8,500 24,600 3,300 6,600 192 Liabilities & Shareholder's Equity Current Liabilities Accounts Payable Unearned Revenue Wages Payable Interest Payable Dividend Payable Total Current Liabilities Long Term Liabilities Long term Notes Payable Total Liabilities Shareholder's Equity Common Stock Retained Earnings (54500+30100-13800) Total Liabilities & Shareholder's Equity 193 194 195 196 197 51,000 40,000 91,000 198 199 44,700 70800 115,500 206,500 200 201