Problem 4-5A (90 minutes) Part 1

ADAMS CONSTRUCTION CO.

Work Sheet
For Year Ended June 30, 2011
Balance Sheet &
Unadjusted Adjusted Income Statement of
Trial Balance Adjustments Trial Balance Statement Owner’s Equity
No. Account Title Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
101 Cash.......................................
17,500 17,500 17,500
126 Supplies..................................
8,900 (a) 5,700 3,200 3,200
128 Prepaid insurance..................... 6,200 (b) 3,900 2,300 2,300
167 Equipment...............................
131,000 131,000 131,000
168 Accumulated depreciation—
Equipment............................. 25,250 (c) 8,500 33,750 33,750
201 Accounts payable..................... 5,800 (d) 550 6,350 6,350
203 Interest payable........................ (h) 240 240 240
208 Rent payable............................ (f) 200 200 200
210 Wages payable......................... (e) 1,600 1,600 1,600
213 Property taxes payable.............. (g) 900 900 900
251 Long-term notes payable........... 24,000 24,000 24,000
301 S. Adams, Capital...................... 77,660 77,660 77,660
302 S. Adams, Withdrawals.............. 30,000 30,000 30,000
401 Construction fees earned........... 134,000 134,000 134,000
612 Depreciation expense—
Equipment............................. (c 8,500 8,500 8,500
)
623 Wages expense........................
45,860 (e 1,600 47,460 47,460
)
633 Interest expense.......................
2,640 (h 240 2,880 2,880
)
637 Insurance expense................... (b 3,900 3,900 3,900
)
640 Rent expense...........................
13,200 (f) 200 13,400 13,400
652 Supplies expense..................... (a 5,700 5,700 5,700
)
683 Property taxes expense.............
4,600 (g 900 5,500 5,500
)
684 Repairs expense.......................2,810 2,810 2,810
690 Utilities expense........................
4,000 ______ (d 550 _____ 4,550 ______ 4,550 ______ ______ ______
 )
Totals......................................
266,710 266,710 21,590 21,590 278,700 278,700 94,700 134,000 184,000 144,700
Net Income.............................. 39,300 ______ ______ 39,300
Totals...................................... 134,000 134,000 184,000 184,000
Problem 4-5A (Continued)

Part 2

Adjusting entries (all dated June 30, 2011):

(a) Supplies Expense......................................... 5,700

Supplies................................................. 5,700
To record consumption of supplies.

(b) Insurance Expense....................................... 3,900

Prepaid Insurance................................. 3,900
To record expiration of insurance.

(c) Depreciation Expense, Equipment.............. 8,500

Accumulated Depreciation, Equipment 8,500
To record depreciation.

(d) Utilities Expense........................................... 550

Accounts Payable................................. 550
To record accrued utilities costs.

(e) Wages Expense............................................. 1,600

Wages Payable...................................... 1,600
To record accrued wages.

(f) Rent Expense................................................ 200

Rent Payable.......................................... 200
To record remainder of annual rent.

(g) Property Taxes Expense.............................. 900

Property Taxes Payable........................ 900
To record additional property taxes.

(h) Interest Expense (1% x $24,000)................. 240

Interest Payable..................................... 240
To record the month’s interest expense.
Problem 4-5A (Continued)

Closing entries (all dated June 30, 2011):

(1) Construction Fees Earned........................... 134,000

Income Summary.................................. 134,000
To close the revenue account.

(2) Income Summary.......................................... 94,700

Depreciation Expense, Equipment...... 8,500
Wages Expense..................................... 47,460
Interest Expense.................................... 2,880
Insurance Expense................................ 3,900
Rent Expense......................................... 13,400
Supplies Expense.................................. 5,700
Property Taxes Expense....................... 5,500
Repairs Expense................................... 2,810
Utilities Expense.................................... 4,550
To close the expense accounts.

(3) Income Summary.......................................... 39,300

S. Adams, Capital.................................. 39,300
To close the Income Summary account.

(4) S. Adams, Capital.......................................... 30,000

S. Adams, Withdrawals......................... 30,000
To close the withdrawals account.
Problem 4-5A (Continued)

Part 3
ADAMS CONSTRUCTION CO.
Income Statement
For Year Ended June 30, 2011
Construction fees earned................................. $134,000
Expenses
Depreciation expense—Equipment............... $ 8,500
Wages expense................................................ 47,460
Interest expense.............................................. 2,880
Insurance expense.......................................... 3,900
Rent expense.................................................... 13,400
Supplies expense............................................ 5,700
Property taxes expense.................................. 5,500
Repairs expense.............................................. 2,810
Utilities expense............................................... 4,550
Total expenses................................................. 94,700
Net income......................................................... $ 39,300

ADAMS CONSTRUCTION CO.

Statement of Owner's Equity
For Year Ended June 30, 2011
S. Adams, Capital, June 30, 2010..................... $ 52,660
Add: Investment by owner............................... $25,000
Net income................................................ 39,300 64,300
116,960
Less: Withdrawals by owner............................ (30,000)
S. Adams, Capital, June 30, 2011..................... $ 86,960
Problem 4-5A (Continued)
ADAMS CONSTRUCTION CO.
Balance Sheet
June 30, 2011
Assets
Current assets
Cash....................................................................... $ 17,500
Supplies................................................................. 3,200
Prepaid insurance................................................. 2,300
Total current assets.............................................. $ 23,000
Plant assets
Equipment............................................................. 131,000
Accumulated depreciation—Equipment............. (33,750)
97,250
Total assets............................................................. $120,250

Liabilities
Current liabilities
Accounts payable................................................. $ 6,350
Interest payable..................................................... 240
Rent payable.......................................................... 200
Wages payable...................................................... 1,600
Property taxes payable........................................ 900
Current portion of long-term note payable........ 5,000
Total current liabilities......................................... $ 14,290
Noncurrent liabilities
Long-term note payable (less current portion).. 19,000
Total liabilities......................................................... 33,290
Equity
S. Adams, Capital................................................... 86,960
Total liabilities and equity...................................... $120,250