including adjustments based on these additional facts

The following unadjusted trial balance is for Adams Construction Co. as of the end of its 2005 fiscal
year. The June 30, 2004, credit balance of the owner’s capital account was $52,660, and the owner
invested $25,000 cash in the company during the 2005 fiscal year.
101
126
128
167
168
201
203
208
210
213
251
301
302
401
612
623
633
637
640
652
683
684
690
Cash
Supplies
Prepaid insurance
Equipment
Accumulated depreciation—Equipment
Accounts payable
Interest payable
Rent payable
Wages payable
Property taxes payable
Long-term notes payable
S. Adams, Capital
S. Adams, Withdrawals
Construction fees earned
Depreciation expense—Equipment
Wages expense
Interest expense
Insurance expense
Rent expense
Supplies expense
Property taxes expense
Repairs expense
Utilities expense
Totals
$ 17,500
8,900
6,200
131,000
30,000
0
45,860
2,640
0
13,200
0
4,600
2,810
4,000
$ 266,710
$ 25,250
5,800
0
0
0
0
24,000
77,660
134,000
$ 266,710
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
No. Account Title Debit Credit
ADAMS CONSTRUCTION CO.
Unadjusted Trial Balance
June 30, 2005
A B C D
Required
1. Prepare the income statement and the statement of owner’s equity for the calendar-year 2005, and
the classified balance sheet at December 31, 2005.
2. Prepare the necessary closing entries at December 31, 2005.
3. Use the information in the financial statements to compute these ratios: (a) return on assets (total
assets at December 31, 2004, was $200,000), (b) debt ratio, (c) profit margin ratio (use total revenues
as the denominator), and (d) current ratio.
Chapter 4 Completing the Accounting Cycle 165
Check (1) Total assets (12/31/2005),
$178,100; Net income, $13,100
Required
1. Prepare a 10-column work sheet for fiscal year 2005, starting with the unadjusted trial balance
and including adjustments based on these additional facts:
a. The supplies available at the end of fiscal year 2005 had a cost of $3,200.
b. The cost of expired insurance for the fiscal year is $3,900.
c. Annual depreciation on equipment is $8,500.
d. The June utilities expense of $550 is not included in the unadjusted trial balance because the
bill arrived after the trial balance was prepared. The $550 amount owed needs to be recorded.
e. The company’s employees have earned $1,600 of accrued wages at fiscal year-end.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $200.
g. Additional property taxes of $900 have been assessed for this fiscal year but have not been
paid or recorded in the accounts.
h. The long-term note payable bears interest at 1% per month. The unadjusted Interest Expense
account equals the amount paid for the first 11 months of the 2005 fiscal year. The $240 accrued
interest for June has not yet been paid or recorded. (Note that the company is required
to make a $5,000 payment toward the note payable during the 2006 fiscal year.)
Larson-Wild-Chiappetta:
Fundamental Accounting
Principles, Seventeenth
Edition
4. Completing the
Accounting Cycle
Text © The McGraw-Hill
Companies, 2004
The following six-column table for Bullseye Ranges includes the unadjusted trial balance as of
December 31, 2005.
Problem 4-6AA
Preparing adjusting, reversing, and
next period entries
P4 BULLSEYE RANGES
December 31, 2005
Unadjusted Adjusted
Trial Trial
Account Title Balance Adjustments Balance
Dr. Cr. Dr. Cr. Dr. Cr.
Cash . . . . . . . . . . . . . . . . . . . . . $ 13,000
Accounts receivable . . . . . . . . . . 0
Supplies . . . . . . . . . . . . . . . . . . 5,500
Equipment . . . . . . . . . . . . . . . . 130,000
Accumulated depreciation—
Equipment . . . . . . . . . . . . . . . $ 25,000
Interest payable . . . . . . . . . . . . . 0
Salaries payable . . . . . . . . . . . . . 0
Unearned member fees . . . . . . . 14,000
Notes payable . . . . . . . . . . . . . . 50,000
T. Allen, Capital . . . . . . . . . . . . . 58,250
T. Allen, Withdrawals . . . . . . . . . 20,000
Member fees earned . . . . . . . . . 53,000
Depreciation expense—
Equipment . . . . . . . . . . . . . . . 0
Salaries expense . . . . . . . . . . . . 28,000
Interest expense . . . . . . . . . . . . 3,750
Supplies expense . . . . . . . . . . . . 0
Totals . . . . . . . . . . . . . . . . . . . . $200,250 $200,250
Required
1. Complete the six-column table by entering adjustments that reflect the following information:
a. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The
next payday is January 4, at which time $1,600 of salaries will be paid.
b. The cost of supplies still available at December 31, 2005, is $2,700.
c. The notes payable requires an interest payment to be made every three months. The amount
of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment,
at an amount of $1,500, is due on January 15, 2006.
d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December
31, 2005.
e. In addition to the member fees included in the revenue account balance, the company has earned
another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company
is also expected to collect $8,000 on that same day for new fees earned in January 2006.
f. Depreciation expense for the year is $12,500.
2. Use the work sheet to enter the adjusting and closing entries; then journalize them.
3. Prepare the income statement and the statement of owner’s equity for the year ended June 30 and
the classified balance sheet at June 30, 2005.