[lavoy2marvin]

On this assignment, I understand the unadjusted trial balance, adjusted trial balance, income statement, and the balance sheet/statement of owner's equity. However, I do not get or understand the adjustments. Would someone please Help?

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.

Dr. Cr.
Cash... 17,500
Supplies... 8,900
Prepaid Insurance... 6,200
Equipment... 131,000
Accumulated Depreciation-Equipment... 25,250
Accounts payable... 5,800
Interest payable... 0
Rent payable... 0
Wages payable... 0
Property taxes payable... 0
Long-term notes payable... 24,000
S. Adams, Capital... 77,660
S. Adams, Withdrawal... 30,000
Construction fees earned... 134,000
Depreciation expense-Equipment... 0
Wages expense... 45,860
Interest expense... 2,640
Rent expense... 13,200
Supplies expense... 0
Property taxes expense... 4,600
Repairs expense... 2,810
Utilities expense... 4,000
Totals... 266,710... 266,710

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.)
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.
Analysis Component
4. Analyze the following separate errors and describe how each would affect the 10-column worksheet. 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 that the adjustment for supplies used consisted of a credit to Supplies for $3,200 and a debit for $3,200 to Supplies Expense.
b. When the adjusted trial balance in the work sheet is completed, the $17,500 Cash balance is incorrectly entered in the Credit column.

[hilliergirl]

Hi I'm taking accounting right now... its actually quite easy for c)

Equipment is 131,000

Because it is depreciating/ amortized you add Amortization Expense and Accum. Amortization

DR Amortization Expense-Equipment 8500
CR Accum. Amortization- Equipment 8500

Hope that helped you! I have a text book with all of this stuff!