Smith Contractors, Inc. December 31, 2014
Unadjusted Trial balance
|
Cash
|
58,400
|
|
|
Accounts Receivable
|
22,000
|
|
|
Supplies on Hand
|
5,500
|
|
|
Prepaid Insurance
|
36,000
|
|
|
Inventory
|
10,000
|
|
|
Vehicle
|
15,000
|
|
|
Equipment
|
75,000
|
|
|
Accumulated Depreciation
|
|
52,000
|
|
Accounts Payable
|
|
8,000
|
|
Unearned Revenue
|
|
14,900
|
|
Wages Payable
|
|
2,000
|
|
Long-Term Notes Payable
|
|
45,000
|
|
Common Stock
|
|
46,000
|
|
Retained Earnings (1/1/2014)
|
|
128,000
|
|
Dividends
|
5,000
|
|
|
Sales Revenue
|
|
416,000
|
|
COGS
|
100,000
|
|
|
Delivery Expense
|
45,000
|
|
|
Depreciation Expense
|
16,000
|
|
|
Rent Expense
|
54,000
|
|
|
Insurance Expense
|
20,000
|
|
|
Wages Expense
|
195,000
|
|
|
Supplies Expense
|
16,000
|
|
|
Interest Expense
|
4,000
|
|
|
Income Tax Expense
|
35,000
|
|
|
Total
|
711,900
|
711,900
|
Part 1: Prepare adjusting journal entries using the unadjusted trial balance on the previous page and the information provided below. Use only the account names provided on the previous page (do not create any new account names).
1. The prepaid insurance balance reflects a12-month insurance policy which started on Sept. 1, 2014, and no adjustments were made from Sept. 1 - Dec. 31, 2014. Write the adjusting journal entry for Dec. 31, 2014.
1. Additional depreciation expense of $15,000 needs to be recorded for the year ended 2014.
2. Additional wages due to employees of $5,000 ($5,000 more than the recorded
$2,000 balance) needs to be recorded at year end. These wages will be paid to employees on January 9, 2015. (next month)
3. The company has completed $6,900 of the $14,900 in unearned revenue as of Dec. 31st.
4. In Dec. the company provided services worth $2,000 to clients that were not yet billed or recorded by Dec. 31. Record the additional revenue.
5. On Dec 31st the company completed a physical count of their supplies and determined that only $3,500 of supplies are still on hand.
Part 2: Post the adjusting journal entries to t-accounts:
(Hints on getting started: Above each T-account, write the account name of each account affected by an adjusting journal entry (you may not need to use all of the T-accounts). Write in the unadjusted balance for each of these accounts (from page 1)...the unadjusted balance might be a debit, a credit, or zero balance. Now you are ready to post your adjusting journal entries from page 2 onto the corresponding T-accounts and then calculate adjusted balances.)
Part 3: Prepare the Adjusted Trial Balance (i.e., after the previous 6 journal entries are posted)
Smith Contractors, Inc. December 31, 2014 Adjusted Trial balance
|
Cash
|
|
|
|
Accounts Receivable
|
|
|
|
Supplies on Hand
|
|
|
|
Prepaid Insurance
|
|
|
|
Inventory
|
|
|
|
Vehicle
|
|
|
|
Equipment
|
|
|
|
Accumulated Depreciation
|
|
|
|
Accounts Payable
|
|
|
|
Unearned Revenue
|
|
|
|
Wages Payable
|
|
|
|
Long-Term Notes Payable
|
|
|
|
Common Stock
|
|
|
|
Retained Earnings (1/1/2014)
|
|
|
|
Dividends
|
|
|
|
Sales Revenue
|
|
|
|
COGS
|
|
|
|
Delivery Expense
|
|
|
|
Depreciation Expense
|
|
|
|
Rent Expense
|
|
|
|
Insurance Expense
|
|
|
|
Wages Expense
|
|
|
|
Supplies Expense
|
|
|
|
Interest Expense
|
|
|
|
Income Tax Expense
|
|
|
|
Total
|
|
|
|
|
|
|
Part 4: Prepare the Income Statement, the Statement of Retained Earnings, and a Classified Balance Sheet (in this order). Include the appropriate titles, subtotals and totals.
(You may not use all the lines provided in the statements depending on how you label titles)
Part 5: Answer the following questions using the above completed financial statements:
What is Net Income or Net Loss?
What is Total Current Assets?
What is Total Current Liabilities?
What is Total Assets?