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
To prepare a 10-column worksheet for fiscal year 2005, starting with the unadjusted trial balance and including adjustments based on the additional facts given, follow these steps:
Step 1: Obtain the unadjusted trial balance.
The unadjusted trial balance is a list of all the accounts and their balances before any adjustments are made. You would need this information to start the worksheet.
Step 2: Create the 10-column worksheet.
A 10-column worksheet typically consists of the following columns: Account Titles, Trial Balance, Adjustments, Adjusted Trial Balance, Income Statement, Balance Sheet, Owner's Equity, Income Summary, Closing Entries, and Post-Closing Trial Balance. Create a table with these columns.
Step 3: Enter the accounts and balances from the unadjusted trial balance into the "Trial Balance" column.
Transfer the account titles and their respective balances from the unadjusted trial balance to the "Trial Balance" column of the worksheet.
Step 4: Make the necessary adjusting entries based on the given additional facts.
Based on the additional facts provided, make the necessary adjustments to the accounts. Here are the adjustments for each fact:
a. The supplies available at the end of fiscal year 2005 had a cost of $3,200.
Decrease the Supplies account by $3,200 and increase the Supplies Expense account by $3,200.
b. The cost of expired insurance for the fiscal year is $3,900.
Increase the Insurance Expense account by $3,900 and decrease the Prepaid Insurance account by $3,900.
c. Annual depreciation on equipment is $8,500.
Increase the Depreciation Expense account by $8,500 and decrease the Accumulated Depreciation account by $8,500.
d. The June utilities expense of $550 is not included in the unadjusted trial balance.
Increase the Utilities Expense account by $550.
e. The company’s employees have earned $1,600 of accrued wages at fiscal year-end.
Increase the Wage Expense account by $1,600 and increase the Accrued Wages Liability account by $1,600.
f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $200.
Increase the Rent Expense account by $200 and increase the Accrued Rent Payable account by $200.
g. Additional property taxes of $900 have been assessed for this fiscal year.
Increase the Property Tax Expense account by $900 and increase the Property Tax Payable account by $900.
h. 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 been recorded.
Increase the Interest Expense account by $240 and increase the Accrued Interest Payable account by $240.
Step 5: Transfer the adjustments to the "Adjustments" column.
Transfer the adjustments made for each account to the "Adjustments" column of the worksheet, next to their respective account titles.
Step 6: Calculate the adjusted balances for each account.
Add or subtract the adjustments from the balances in the "Trial Balance" column to get the adjusted balances for each account. Transfer these adjusted balances to the "Adjusted Trial Balance" column.
Step 7: Complete the worksheet.
Use the adjusted balances to calculate the income statement, statement of owner's equity, and balance sheet sections of the worksheet. Also, calculate the closing entries and post-closing trial balance sections based on the adjusted balances.
Note: Since the question does not provide specific account titles or balances, it is not possible to create the actual worksheet or financial statements. However, by following the steps outlined above and applying the given facts to the appropriate accounts, you should be able to create the worksheet and financial statements accordingly.