The following unadjusted trial balance is for the Company as of December 31 st ,
ID: 2468486 • Letter: T
Question
The following unadjusted trial balance is for the Company as of December 31st, 2016. The December 31st 2015 balance in the owner’s capital account was $50,000, and the owner invested $40,000 cash in the company during 2016.
Debit
Credit
Cash
$ 10,000
Supplies
15,000
Prepaid insurance
14,000
Equipment
150,000
Accum. Dep. - Equipment
$ 10,000
Accounts payable
4,650
Interest payable
0
Rent payable
0
Wages payable
0
Property taxes payable
0
Utilities payable
0
Long-term notes payable
30,000
Owner’s Capital
90,000
Withdrawals
10,000
Fees earned
136,000
Depreciation expense – Equip.
0
Wages expense
40,000
Interest expense
1,650
Insurance expense
0
Rent expense
12,000
Supplies expense
0
Property taxes expense
9,000
Repairs expense
4,000
Utilities expense
5,000
Totals
$270,650
$270,650
1. Using the spreadsheet below, develop three 2016 trial balances for the company based on the following additional information: (25 points.)
a. The supplies available at the end of 2016 had a cost of $7,000.
b. The cost of expired (used) insurance for 2016 is $10,000.
c. Annual depreciation on equipment is $5,000.
d. The December utilities expense of $700 is not included in the unadjusted trial balance.
e. The company’s employees have earned $2,000 of accrued wages by the end of December.
f. Rent expense of $3,000 has been incurred, but not yet paid or recorded by year end.
g. Property taxes of $500 have been assessed for 2016, but have not yet been paid or recorded.
h. Accrued interest expense of $150 for December has not been recorded or paid.
Account
Unadjusted Trial Balance
Adjusted Trial Balance
Post-Closing Trial Balance
Debit
Credit
Debit
Credit
Debit
Credit
Cash
Supplies
Prepaid Insurance
Equipment
Accum. Dep. – Equip.
Accounts payable
Interest payable
Rent payable
Wages payable
Property taxes pay.
Utilities payable
Long-term notes pay.
Owner’s Capital
Withdrawals
Fees earned
Dep. expense - Equip
Wages expense
Interest expense
Insurance expense
Rent expense
Supplies expense
Property taxes exp.
Repairs exp.
Utilities expense
Totals
2. Prepare an income statement (10 points) and classified balance sheet (15 points) in good form for the year ended December 31st, 2016.
Debit
Credit
Cash
$ 10,000
Supplies
15,000
Prepaid insurance
14,000
Equipment
150,000
Accum. Dep. - Equipment
$ 10,000
Accounts payable
4,650
Interest payable
0
Rent payable
0
Wages payable
0
Property taxes payable
0
Utilities payable
0
Long-term notes payable
30,000
Owner’s Capital
90,000
Withdrawals
10,000
Fees earned
136,000
Depreciation expense – Equip.
0
Wages expense
40,000
Interest expense
1,650
Insurance expense
0
Rent expense
12,000
Supplies expense
0
Property taxes expense
9,000
Repairs expense
4,000
Utilities expense
5,000
Totals
$270,650
$270,650
Explanation / Answer
a) Supplies expense Dr 8000 (15000-7000) Supplies Cr 8000 b) Insurance expenses Dr 10000 Prepaid Insurance Cr 10000 c) Depriciation expense - equip Dr 5000 Accumulated depriciation - equip Cr 5000 d) Utilities expense Dr 700 Utilities payable Cr 700 e) Wages expense Dr 2000 Wages payable Cr 2000 f) Rent expense Dr 3000 Rent payable Cr 3000 g) Property tax expense Dr 500 Property tax payable Cr 500 h) Interest expense Dr 150 Interest payable Cr 150 1) Unadjusted Adjusted Post closing Dr Cr Dr Cr Dr Cr Cash 10000 10000 10000 Supplies 15000 7000 7000 Prepaid Insurance 14000 4000 4000 Equipment 150000 150000 150000 Accum dep- equip 10000 15000 15000 Accounts payable 4650 4650 4650 Interest Payable 150 150 Rent payable 3000 3000 Wages payable 2000 2000 Property tax payable 500 500 Utilities payable 700 700 Long term notes pay 30000 30000 30000 Owners capital 90000 90000 90000 Withdrawal 10000 10000 10000 Retained earnings 35000 Fees earned 136000 136000 Dep expense - equip 5000 Wages expense 40000 42000 Interest expense 1650 1800 Insurance expense 10000 Rent expense 12000 15000 Supplies expense 8000 Property tax exp 9000 9500 Repairs exp 4000 4000 Utilities expense 5000 5700 Totals 270650 270650 282000 282000 181000 181000 2) Income statement Fess Earned 136000 Less : operating expenses Dep expense - equip 5000 Wages expense 42000 Interest expense 1800 Insurance expense 10000 Rent expense 15000 Supplies expense 8000 Property tax exp 9500 Repairs exp 4000 Utilities expense 5700 101000 Net Income transferred to retained earnings 35000 Balance Sheet Current Asset Cash 10000 Supplies 7000 Prepaid Insurance 4000 Total current asset 21000 Fixed Asset Equipment 150000 Less Accum dep- equip 15000 135000 Total fixed assets 156000 Current liabilities Accounts payable 4650 Interest Payable 150 Rent payable 3000 Wages payable 2000 Property tax payable 500 Utilities payable 700 11000 Non current liabilities Long term notes pay 30000 Stockholders equity Owners capital 90000 Less : Withdrawal 10000 Add : Retained earnings 35000 115000 Total liabilities and stockholders equity 156000
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