FUND.ACCT.PRIN -ONLINE ONLY  >I<
FUND.ACCT.PRIN -ONLINE ONLY >I<
22nd Edition
ISBN: 9780077632878
Author: Wild
Publisher: MCG
bartleby

Concept explainers

bartleby

Videos

Question
Book Icon
Chapter 4, Problem 3GLP

Requirement 1:

To determine

To determine:

We have to determine 10 column worksheet for fiscal year 2015.

Requirement 1:

Expert Solution
Check Mark

Answer to Problem 3GLP

Solution:


    ACE CONSTRUCTION COMPANY
    Work Sheet
    For Year Ended JUNE 30, 2015


    Unadjusted
    Trial Balance

    Adjustments
    Adjusted
    Trial Balance
    Income
    Statement
    Balance Sheet and Statement of Owner’s Equity
    No.
    Account Title
    Dr.
    Cr.
    Dr.
    Cr.
    Dr.
    Cr.
    Dr.
    Cr.
    Dr.
    Cr.
    Dr.
    Cr.
    101
    Cash
    18,500





    18,500



    18,500

    126
    Supplies
    9900



    (a)
    6600
    3300



    3300

    128
    Prepaid insurance

    7200



    (b)
    3800
    3400



    3400

    167
    Equipment
    132,000





    132,000



    132,000

    168
    Accumulated depreciation
    Equipment

    26,250


    (c)
    8,400

    34,650



    34,650
    201
    Accounts payable


    6800


    (d)
    650

    7450



    7450
    203
    Interest payable





    (h)
    250

    250



    250
    208
    Rent payable





    (f)
    500

    500



    500
    210
    Wages payable





    (e)
    1800

    1800



    1800
    213
    Property taxes payable




    (g)
    1000

    1000



    1000
    251
    Long-term notes payable

    25,000





    25,000



    25,000
    301
    V.ACE, Capital


    88,660





    88,660



    88660
    302
    V.ACE, Withdrawals
    33,000





    33,000



    33,000

    401
    Construction fees earned

    132100





    132,100

    132,100


    612
    Depreciation expense—
    Equipment



    (c)

    8,400



    8,400


    8,400



    623
    Wages expense

    46,860

    (e)
    1800


    48,660

    48,660



    633
    Interest expense

    2750

    (h)
    250


    3000

    3000



    637
    Insurance expense



    (b)
    3800


    3800

    3800



    640
    Rent expense

    12,000

    (f)
    500


    12,500

    12,500



    652
    Supplies expense



    (a)
    6600


    6600

    6600



    683
    Property taxes expense
    7800

    (g)
    1000


    8800

    8800



    684
    Repairs expense

    2910





    2910

    2,910



    690
    Utilities expense

    5,890
    ______
    (d)
    650

    ______
    6540 7,500
    ______
    6540
    ______
    ______
    ______

    Totals

    278,810
    278,810

    23,000

    23,000
    291,410
    291,410
    101,210
    132100
    190,200
    159,310

    Net Income









    30,890
    ______
    ______
    30,890

    Totals









    132,100
    132,100
    190,200
    190,200

Explanation of Solution

Explanation:

  1. There is no adjustment related to cash thus the balance of cash in unadjusted trial balance will be reported in balance sheet.
  2. the adjustment related to supplies will be added to the balance of supplies in unadjusted trial balance and the final amount will be reported in balance sheet.
  3. the adjustment related to prepaid insurance will be added to the balance of prepaid insurance in unadjusted trial balance and the final amount will be reported in balance sheet.
  4. The equipment will appear at its original cost .
  5. Adjustment related to depreciation will be added to accumulated depreciation balance in unadjusted trial balance and balance will be reported in adjusted trial and balance sheet.
  6. The adjustment of $700 will be added to unadjusted balance and the final balance will be reported in adjusted trial and balance sheet.
  7. Adjustment of interest payable will be made and shown in balance sheet.
  8. Adjustment of rent payable will be made and shown in balance sheet.
  9. Adjustment of wages payable will be made and shown in balance sheet.
  10. Adjustment of property tax payable will be made and shown in balance sheet.
  11. There is no adjustment in notes payable, capital and withdrawal account, thus it will be reported as it is.
  12. Adjustment of depreciation expense will be made and shown in income statement.
  13. All adjustment related to expenses such as rent expense , supplies expense will be made and final balance will be reported in income statement.

Requirement 2:

To determine

To determine:

We have to determine the adjustment journal entry.

Requirement 2:

Expert Solution
Check Mark

Answer to Problem 3GLP

Solution:

    Sr. no.
    Journal titles
    Debit($)
    Credit($)




    a.
    Supplies expense
    6600


    Supplies

    6600

    ( to record consumption of supplies)






    b.
    Insurance Expense
    3,800


    Prepaid insurance

    3,800

    (to record insurance)






    c.
    Depreciation- equipment
    8400


    Accumulated depreciation- equipment

    8400

    ( to record depreciation)






    d.
    Utilities expense
    650


    Accounts payable

    650

    ( to record utilities cost)






    e.
    Wages expense
    1800


    Wages payable

    1800

    ( to record accrued wages)






    f.
    Rent expense
    500


    Rent payable

    500

    ( to record accrued rent)






    g.
    Property tax expense
    1000


    Property tax payable

    1000

    (to record accrued property tax)






    h.
    Interest expense
    250


    Interest payable

    250

    (to record accrued interest)







    Closing entries-


    June 30,2015



    1)
    Construction fee earned
    132,100


    Income summary

    132,100

    (to close revenue account)






    2)
    Income summary
    101,210


    Depreciation-equipment


    8,400

    Wages expense

    48,660

    Interest expenses

    3000

    Insurance expense

    3800

    Rent expenses

    12,500

    Supplies expense

    6600

    Property tax expenses

    8800

    Repair expense

    2,910

    Utilities expense

    6540

    ( to close the expense account)






    3)
    Income summary
    30,890


    ACE capita

    30,890

    ( to close income summary account)






    4)
    Ace capital
    33,000


    Ace withdrawal

    33,000

    (to close withdrawal account)


Explanation of Solution

Explanation:

  1. In this case supplies expense account is debited and supplies account will be credited.
  2. In this case insurance expense account will be debited and prepaid insurance account will be credited.
  3. when depreciation is to recorded then depreciation account will be debited and accumulated depreciation account will be credited.
  4. in this case utilities expense account will be debited and accounts payable account will be credited.
  5. In this case wages expense account will be debited and wages payable account will be credited.
  6. In this case rent expense account will be debited and rent payable account will be credited.
  7. In this case property tax expense account will be debited and property tax payable account will be credited.
  8. In this case interest expense account will be debited and interest payable account will be credited.
  9. When revenue account is to be closed then revenue earned will be debited and income summary account will be credited.
  10. When expense account is to be closed then income summary account will be debited and all expense account will be credited.
  11. When income summary account is to be closed then income summary account will be debited and capital account will be credited.

Requirement 3:

To determine

To determine:

We have to determine the income statement and statement of owner equity.

Requirement 3:

Expert Solution
Check Mark

Answer to Problem 3GLP

Solution:

    INCOME STATEMENT FOR YEAR ENDED JUNE 30, 2015
    PARTICULARSAMOUNT($)AMOUNT($)
    Construction fees earned

    132,100
    Expenses:


    Depreciation expenses-equipment

    8,400

    Wages expenses
    48,660

    Interest expense
    3000

    Insurance expenses
    3800

    Rent expenses
    12,500

    Office supplies expenses
    6600

    Propertry tax expenses
    8800

    Repair expense
    2,910

    Utilities expenses
    6540

    Total expenses

    101,210
    Net income

    $30,890

    STATEMENT OF OWNERS EQUITY FOR YEAR ENDED JUNE 30, 2015
    PARTICULARSAMOUNT($)AMOUNT($)
    opening capital

    53,660
    Add: net income

    30,890
    Add: owner investment

    35,000
    Less: withdrawals

    (33,000)



    Closing capital on June2015

    $86,550

    BALANCE SHEET JUNE 30, 2015
    PARTICULARSAMOUNT($)AMOUNT($)
    Assets:


    Current asset


    Cash
    18,500

    Office supplies
    3300

    Prepaid insurance
    3400

    Total current asset

    25,200
    Plant asset


    Equipment
    132,000

    Accumulated depreciation- equipment
    34650
    97,350
    Total assets

    122,550



    Liabilities and equity


    Current liabilities


    Accounts payable

    7450

    Interest payable

    250

    Rent payable

    500

    Wages payable

    1800

    Property taxes payable
    1000

    Long-term notes payable
    5000

    Total current liabilities

    16000
    Long term liabilities


    Note payable

    20,000
    Equity


    Capital

    86,550
    Total liabilities and equity

    122,550

Explanation of Solution

Explanation:

In income statement net income is calculated by deducting all expenses from revenue. In this case revenue is $132,100 and the sum of all expenses is $101,210 and the net income is $30,890.
Statement of owner equity is change in equity due to withdrawal or net profit. Thus in this case net income will be added to opening capital and withdrawal is deducted to arrive at closing capital.

Requirement 4:

To determine

To determine:

We have to determine the effect of error.

Requirement 4:

Expert Solution
Check Mark

Answer to Problem 3GLP

Solution:

  1. This error is not likely to be detected as a result of completing the work sheet. If it is not so, the income statement will overstate net income, and the balance sheet will overstate the cost of the supplies and total equity.

  2. the error will be discovered in the process of drafting the balance sheet. If it is detected , the financial statements will be unaffected. However, if the error is not detected then cash balance will be affected and it will affect the balance sheet.

Explanation of Solution

Explanation:

  1. This error is of entering the wrong amount in the correct accounts. The ending balance of the supplies account should be $3300, but the entry reduces that account by $3300. The unadjusted balance was $9900, the adjusted balance will be $3300 ($9900 - $6600). In addition, the supplies Expense account balance will be only $3300

  2. This error is not likely to be detected as a result of completing the work sheet. If it is not, the income statement will overstate net income, and the balance sheet will overstate the cost of the supplies and total equity.


  3. the error will be discovered in the process of drafting the balance sheet. If it is detected, the financial statements will be unaffected. However, if the cash balance is erroneously included on the balance sheet, the balance sheet will report wrong asset figure.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Chapter 4 Solutions

FUND.ACCT.PRIN -ONLINE ONLY >I<

Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
The KEY to Understanding Financial Statements; Author: Accounting Stuff;https://www.youtube.com/watch?v=_F6a0ddbjtI;License: Standard Youtube License