Chat with AI
Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta
Edition 22ISBN: 978-0077862275Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta
Edition 22ISBN: 978-0077862275 Exercise 44
The following unadjusted trial balance is for Power Demolition Company as of the end of its April 30, 2015, fiscal year. The April 30, 2014, credit balance of the owner's capital account was $46,900, and the owner invested $40,000 cash in the company during the 2015 fiscal year.
Required
1. Prepare and complete a 10-column work sheet for fiscal year 2015, starting with the unadjusted trial balance and including adjustments based on these additional facts.
a. The supplies available at the end of fiscal year 2015 had a cost of $7,900.
b. The cost of expired insurance for the fiscal year is $10,600.
c. Annual depreciation on equipment is $7,000.
d. The April utilities expense of $800 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $800 amount owed needs to be recorded.
e. The company's employees have earned $2,000 of accrued wages at fiscal year-end.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $3,000.
g. Additional property taxes of $550 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 12% per year. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2015 fiscal year. The $300 accrued interest for April has not yet been paid or recorded. (Note that the company is required to make a $10,000 payment toward the note payable during the 2016 fiscal year.)
2. Using information from the completed 10-column work sheet in part 1, journalize the adjusting entries and the closing entries.
3. Prepare the income statement and the statement of owner's equity for the year ended April 30 and the classified balance sheet at April 30, 2015.
Analysis Component
4. Analyze the following separate errors and describe how each would affect the 10-column work sheet. Explain whether the error is likely to be discovered in completing the work sheet and, if not, the effect of the error on the financial statements.
a. Assume the adjusting entry to reflect expiration of insurance coverage for the period was recorded with a $2,000 credit to Prepaid Insurance and a $2,000 debit to Insurance Expense. The adjustment should have been for $10,600.
b. When the adjusted trial balance in the work sheet was completed, assume that the $4,700 Repairs Expense account balance is extended to the Debit column of the balance sheet columns.
Required
1. Prepare and complete a 10-column work sheet for fiscal year 2015, starting with the unadjusted trial balance and including adjustments based on these additional facts.
a. The supplies available at the end of fiscal year 2015 had a cost of $7,900.
b. The cost of expired insurance for the fiscal year is $10,600.
c. Annual depreciation on equipment is $7,000.
d. The April utilities expense of $800 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $800 amount owed needs to be recorded.
e. The company's employees have earned $2,000 of accrued wages at fiscal year-end.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $3,000.
g. Additional property taxes of $550 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 12% per year. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2015 fiscal year. The $300 accrued interest for April has not yet been paid or recorded. (Note that the company is required to make a $10,000 payment toward the note payable during the 2016 fiscal year.)
2. Using information from the completed 10-column work sheet in part 1, journalize the adjusting entries and the closing entries.
3. Prepare the income statement and the statement of owner's equity for the year ended April 30 and the classified balance sheet at April 30, 2015.
Analysis Component
4. Analyze the following separate errors and describe how each would affect the 10-column work sheet. Explain whether the error is likely to be discovered in completing the work sheet and, if not, the effect of the error on the financial statements.
a. Assume the adjusting entry to reflect expiration of insurance coverage for the period was recorded with a $2,000 credit to Prepaid Insurance and a $2,000 debit to Insurance Expense. The adjustment should have been for $10,600.
b. When the adjusted trial balance in the work sheet was completed, assume that the $4,700 Repairs Expense account balance is extended to the Debit column of the balance sheet columns.
Explanation
This question doesn’t have an expert verified answer yet, let Examlex AI Copilot help.
Fundamental Accounting Principles 22th Edition by John Wild ,Ken Shaw,Barbara Chiappetta
Why don’t you like this exercise?
Other Minimum 8 character and maximum 255 character
Character 255
