Problem 4-2A Preparing a work sheet, adjusting and closing entries, and financial statements LO C3, P1,…

Problem 4-2A Preparing a work sheet, adjusting and closing
entries, and financial statements LO C3, P1,…

Problem 4-2A Preparing a work sheet, adjusting and closing
entries, and financial statements LO C3, P1, P2
The following unadjusted trial balance is for ACE CONSTRUCTION
CO. as of the end of its 2017 fiscal year. The June 30, 2016,
credit balance of the owner’s capital account was $53,800, and the
owner invested $25,000 cash in the company during the 2017 fiscal
year.

ACE CONSTRUCTION CO.

Unadjusted Trial Balance

June 30, 2017

No.
Account
Title

Debit

Credit

101
Cash

$

17,500

126
Supplies

7,500

128
Prepaid insurance

5,500

167
Equipment

135,280

168
Accumulated
depreciation—Equipment

$
20,500

201
Accounts payable

6,600

203
Interest payable

0

208
Rent payable

0

210
Wages payable

0

213
Property taxes payable

0

251
Long-term notes payable

22,000

301
V. Ace, Capital

78,800

302
V. Ace, Withdrawals

31,500

401
Construction fees earned

142,000

612
Depreciation
expense—Equipment

0

623
Wages expense

49,000

633
Interest expense

2,420

637
Insurance expense

0

640
Rent expense

11,000

652
Supplies expense

0

683
Property taxes expense

4,700

684
Repairs expense

2,300

690
Utilities expense

3,200

Totals
$
269,900

$
269,900

Adjustments:

  
The supplies available at the end of fiscal year 2017 had a cost
of $2,700.
The cost of expired insurance for the fiscal year is $3,465.
Annual depreciation on equipment is $8,500.
The June utilities expense of $580 is not included in the
unadjusted trial balance because the bill arrived after the trial
balance was prepared. The $580 amount owed needs to be
recorded.
The company’s employees have earned $1,700 of accrued wages at
fiscal year-end.
The rent expense incurred and not yet paid or recorded at fiscal
year-end is $100.
Additional property taxes of $1,000 have been assessed for this
fiscal year but have not been paid or recorded in the accounts.
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 2017 fiscal year. The $220 accrued interest
for June has not yet been paid or recorded. (The company is
required to make a $4,000 payment toward the note payable during
the 2018 fiscal year.)
Required:

1. Prepare a 10-column work sheet for fiscal year 2017,
starting with the unadjusted trial balance and including
adjustments based on the additional facts.

2a. Prepare the adjusting entries. (all dated June
30, 2017).

2b. Prepare the closing entries. (all dated June
30, 2017):

3a. Prepare the income statement for the year
ended June 30.

3b. Prepare the statement of owner’s equity for
the year ended June 30.

3c. Prepare the classified balance sheet at June
30, 2017.

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