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Problems 4-5A and 4-6A. When responding to the analysis component

Resolved Question:

Problems 4-5A and 4-6A. When responding to the analysis component of 4-5A, be sure to think critically about the possible errors that are described. In your answer, be sure to carefully analyze the worksheet as if the errors were made and present the evidence for your explanation. Identify the consequences of the errors and describe their impact on the financial statements. Explain whether the error is likely to be discovered when completing the worksheet.
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(4-5A)
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.
Required
1. 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 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 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.


(4-6A)

The following six-column table for Bullseye Ranges includes the unadjusted trial balance as of
December 31, 2005.

Required
1. Complete the six-column table by entering adjustments that reflect the following information:
a. As of December 31, 2005, employees had earned $900 of unpaid and unrecorded salaries. The
next payday is January 4, at which time $1,600 of salaries will be paid.
b. The cost of supplies still available at December 31, 2005, is $2,700.
c. The notes payable requires an interest payment to be made every three months. The amount
of unrecorded accrued interest at December 31, 2005, is $1,250. The next interest payment,
at an amount of $1,500, is due on January 15, 2006.
d. Analysis of the unearned member fees account shows $5,600 remaining unearned at December 31, 2005.
e. In addition to the member fees included in the revenue account balance, the company has earned another $9,100 in unrecorded fees that will be collected on January 31, 2006. The company is also expected to collect $8,000 on that same day for new fees earned in January 2006.
f. Depreciation expense for the year is $12,500.

2. Prepare journal entries for the adjustments entered in the six-column table for part 1.
3. Prepare journal entries to reverse the effects of the adjusting entries that involve accruals.
4. Prepare journal entries to record the cash payments and cash collections described for January.
Submitted: 5 years ago.
Category: Homework
Expert:  Neo replied 5 years ago.
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