Question

Problem 4-2A Preparing a work sheet, adjusting and closing entries, and financial statements LO C3, P1, P2

The following unadjusted trial balance is for ACE CONSTRUCTION CO. as of the end of its 2017 fiscal year. The June 30, 2016, credit balance of the owner’s capital account was $53,800, and the owner invested $25,000 cash in the company during the 2017 fiscal year.

ACE CONSTRUCTION CO. Unadjusted Trial Balance June 30, 2017
No.	Account Title	Debit				Credit
101	Cash	$	17,500
126	Supplies		7,500
128	Prepaid insurance		5,500
167	Equipment		135,280
168	Accumulated depreciation—Equipment					$	20,500
201	Accounts payable						6,600
203	Interest payable						0
208	Rent payable						0
210	Wages payable						0
213	Property taxes payable						0
251	Long-term notes payable						22,000
301	V. Ace, Capital						78,800
302	V. Ace, Withdrawals		31,500
401	Construction fees earned						142,000
612	Depreciation expense—Equipment		0
623	Wages expense		49,000
633	Interest expense		2,420
637	Insurance expense		0
640	Rent expense		11,000
652	Supplies expense		0
683	Property taxes expense		4,700
684	Repairs expense		2,300
690	Utilities expense		3,200
	Totals	$	269,900			$	269,900

Adjustments:
  

The supplies available at the end of fiscal year 2017 had a cost of $2,700.

The cost of expired insurance for the fiscal year is $3,465.

Annual depreciation on equipment is $8,500.

The June utilities expense of $580 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $580 amount owed needs to be recorded.

The company’s employees have earned $1,700 of accrued wages at fiscal year-end.

The rent expense incurred and not yet paid or recorded at fiscal year-end is $100.

Additional property taxes of $1,000 have been assessed for this fiscal year but have not been paid or recorded in the accounts.

The long-term note payable bears interest at 12% per year. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2017 fiscal year. The $220 accrued interest for June has not yet been paid or recorded. (The company is required to make a $4,000 payment toward the note payable during the 2018 fiscal year.)

Required:
1. Prepare a 10-column work sheet for fiscal year 2017, starting with the unadjusted trial balance and including adjustments based on the additional facts.
2a. Prepare the adjusting entries. (all dated June 30, 2017).
2b. Prepare the closing entries. (all dated June 30, 2017):
3a. Prepare the income statement for the year ended June 30.
3b. Prepare the statement of owner's equity for the year ended June 30.
3c. Prepare the classified balance sheet at June 30, 2017.

Answer 1