Practice Set #2

Having recorded, posted (to the General Ledger) and began the 12-31-22 Trial Balance worksheet with the unadjusted balances, we are now going to prepare the Adjusting Journal Entries so that we can prepare the four fundamental financial statements.

a.

The payroll summary for the week ended Friday, December 31 contained the following information (for simplification purposes, payroll tax expenses have been included in the amounts): Office and Administrative Salaries - $ 17,613 Sales Salaries and Commissions - 3,666 Delivery and Warehouse Wages - 2,119 Total Wages Paid $ 23,398 The bi-weekly pay period will end on January 7 2023.

b.

Interest accrued at December 31, 2022 is composed of the following

Note Receivable From:	Date of Note Receivable	Face Value	Interest Rate (Annual)	Term of note	# of Days Interest to be Accrued	Interest to be accrued @ 12/31/22
Coconino Contractors, Inc.	11/1/2022	$ 45,000	12%	3 Months (90 Days)
Bilder Construction Company	12/16/2022	$ 45,200	14%	6 Months (180 Days)
Beverly's Building Products	12/26/2022	$ 14,000	12%	6 Months (180 Days)

c.

No interest payments were made on the company's $15,000 12% note payable during 2022.

d.

A count of office supplies at year-end indicated remaining office supplies of $3,750 at December 31.

e.

Plant and Equipment to be depreciated are composed of the following

f.

A physical inventory was conducted of the warehouse at December 31 and the total value of inventory counted was $482,909.

g.

A review of open Accounts Receivable was conducted at year-end and it was determined that an estimated 5% of accounts receivable will be uncollected in the coming year.

h.

Two months remain on the warehouse rental (paid in advance in 2022). The total value of the rent for January and February 2023 is $4,660.

i.

A review of insurance policies indicated that the value of the unexpired portion of existing policies was $5,640 at year end. Insurance expense is allocated to selling and general insurance expense at 25% and 75% respectively. (total expense should be 5,380)

Please perform the following tasks: 1 Prepare the unadjusted trial balance in the 12-31-22 Trial Balance worksheet based on the General Ledger that you have received with this packet. 2 Prepare the Adjusting Journal Entries at December 31, 2022 based on the information provided in a. through h. above and record them on the 12-31-22 Trial Balance worksheet and post them to the General Ledger. 3 Post the adjusting entries to the General Ledger and extend that data to compute the Adjusted Trial Balance on the 12-31-22 Trial Balance worksheet. 4 From the Adjusted Trial Balance, prepare the four fundamental financial statements at December 31, 2022: a. Income Statement b. Statement of Retained Earnings c. Balance Sheet d. Statement of Cash Flows (a 12/31/21 Balance Sheet is provided to perfom the indirect method of establishing cash provided from operations 5 Prepare the Closing Journal Entries at December 31, 2022 and record them on the 12-31-22 Trial Balance worksheet and post them to the General Ledger. 6 Prepare the Post-Closing Trial Balance at December 31, 2022 from the 12-31-22 Trial Balance worksheet your Retained Earnings balance should be the same as on your 12/31/22 Balance Sheet prepared in item 4c. above.

		unadjusted trial balance
No.	Account	Debit	Credit
101	Cash	310,132
106.1	A/R-Boecker Builders	42,040
106.2	A/R-The Potts Company	26,770
106.3	A/R-Swanson Brothers Construction	22,650
106.4	A/R-A&B Hardware	7,920
106.5	A/R-Trudy's Plumbing	55,770
106.6	A/R-Coconino Contractors, Inc	53,080
106.7	A/R-Rankin Plumbing Corp.	-
106.8	A/R-Beverly's Building Products	13,150
106.9	A/R-Bilder Construction Company	44,900
106.1	A/R-Iwanaga Plumbing and Heating	-
107	Allowance for Doubtful Accounts		880
109	Interest Receivable
111	Notes Receivable	104,200
119	Merchandise inventory	487,919
124	Office supplies	6,680
128	Prepaid insurance	11,020
131	Prepaid rent	25,410
153	Trucks and Lifts	70,500
154	Accumulated depreciation - Trucks and Lifts		34,990
161	Furniture and Equipment	32,800
162	Accumulated Depreciation - Furniture and Equipment		13,200
173	Buildings	306,000
174	Accumulated depreciation - Buildings		73,040
183	Land	99,650
201.1	A/P - Phoenix Plastics		48,330
201.2	A/P - Business Basics, Inc		3,000
201.3	A/P - Edward's Plumbing Supplies, Inc.		40,626
201.4	A/P - DeKalb Transport		2,300
201.5	A/P - Oxenford Copperworks		58,940
201.6	A/P - Smith Pipe Company		-
201.7	A/P - Ron & Rod's Plumbing Products		14,850
201.8	A/P - Khatan Steel Corp		-
203	Interest Payable		-
210	Salaries and Wages payable		-
245	Notes Payable		15,000
307	Common Stock		207,000
316	Additional Paid-In Capital		292,400
318	Retained earnings		549,690
319	Dividends	49,000
403	Installation Revenue		35,272
409	Interest Revenue		3,150
413	Sales		5,576,780
414	Sales returns and allowances	14,060
415	Sales discounts	77,041
502	Cost of goods sold	3,918,450
606	Depreciation expense - Buildings	-
611	Depreciation expenseTrucks and Lifts	700
612	Depreciation Expense - Furniture and Equipment	-
620	Office and Administrative Salaries	827,091
621	Sales Salaries and Commissions	171,361
623	Delivery and Warehouse Wages	118,638
633	Interest Expense	24,570
635	Insurance Expense - Selling	-
637	Insurance Expense - General	-
642	Warehouse Rental Expense	-
650	Office Expense	2,081
655	Advertising Expense	7,078
656	Bad Debt Expense	-
663	Delivery Expense	22,367
690	Utilities Expense	16,270
705	Gain on Sale of Assets	-
808	Loss on Sale of Assets	150
901	Income Summary	-
	Totals	6,969,448	6,969,448