Assuming the following Adjusted Trial Balance, create the Post-Closing Trial Balance that would result, after all closing journal entries were made and posted:

$$\begin{array}{c} \textbf{Adjusted Trial Balance} \end{array}$$

$$\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{5pt}22,900}\\ \text{Prepaid Insurance}&\text{\hspace{15pt}4,000}\\ \text{Fixed Assets}&\text{\hspace{10pt}44,000}\\ \text{Notes Payable}&&\text{\$\hspace{5pt}40,000}\\ \text{Common Stock}&&\text{\hspace{10pt}25,000}\\ \text{Retained Earnings}&&\text{\hspace{10pt}48,350}\\ \text{Dividends}&\text{\hspace{10pt}22,000}\\ \text{Sales Revenue}&&\text{\hspace{5pt}150,000}\\ \text{Automobile Expense}&\text{\hspace{10pt}26,500}\\ \text{Insurance Expense}&\text{\hspace{10pt}20,000}\\ \text{Salaries Expense}&\text{\hspace{5pt}122,500}\\ \text{Supplies Expense}&\underline{\text{\hspace{15pt}1,450}}&\underline{\text{\hspace{39pt}}}\\ &\underline{\underline{\text{\$\hspace{1pt}263,350}}}&\underline{\underline{\text{\$\hspace{1pt}263,350}}}\\ \end{array}$$

The following Post-Closing Trial Balance contains errors. Prepare a corrected Post-Closing Trial Balance:

$$\begin{array}{c} \textbf{Post-Closing Trial Balance} \end{array}$$

$$\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{1pt}29,900}\\ \text{Prepaid Insurance}&\text{\hspace{10pt}5,500}\\ \text{Fixed Assets}&&\text{\$\hspace{5pt}50,000}\\ \text{Notes Payable}&&\text{\hspace{10pt}46,000}\\ \text{Common Stock}&\text{\hspace{5pt}32,000}\\ \text{Retained Earnings}&\underline{\text{\hspace{34pt}}}&\underline{\text{\hspace{15pt}7,400}}\\ &\underline{\underline{\text{\$\hspace{1pt}67,400}}}&\underline{\underline{\text{\$\hspace{1pt}103,400}}}\\ \end{array}$$

The following unadjusted trial balance is for Power Demolition Company as of the end of its April 30, 2015, fiscal year. The April 30, 2014, credit balance of the owner’s capital account was $46,900, and the owner invested$40,000 cash in the company during the 2015 fiscal year.

$$\begin{array}{|c|c|c|c|c|} \hline & \text { A } & \text { B } & & \\ \hline 1 & & \text { POWER DEMOLITION } & \text { } & \\ \hline 2 & & \text { Unadjusted Trial Balance} & & \\ \hline 3 & & \text { April 30, 2015} & & \\ \hline 4 & \text { No. } & \text { Account Title } & \text { Debit } & \text { Credit } \\ \hline 5 & 101 & \text { Cash } & \$ 7,000 & \\ \hline 6 & 126 & \text { Supplies } & 16,000 & \\ \hline 7 & 128 & \text { Prepaid insurance } & 12,600 & \\ \hline 8 & 167 & \text { Equipment } & 200,000 & \\ \hline 9 & 168 & \text { Accumulated depreciation-Equipment } & & \$ 14,000 \\ \hline 10 & 201 & \text { Accounts payable } & & 6,800 \\ \hline 11 & 203 & \text { Interest payable } & & 0 \\ \hline 12 & 208 & \text { Rent payable } & & 0 \\ \hline 13 & 210 & \text { Wages payable } & & 0 \\ \hline 14 & 213 & \text { Property taxes payable } & & 0 \\ \hline 15 & 251 & \text { Long-term notes payable } & & 30,000 \\ \hline 16 & 301 & \text { J. Bonn, Capital } & & 86,900 \\ \hline 17 & 302 & \text { J. Bonn, Withdrawals } & 12,000 & \text { } \\ \hline 18 & 401 & \text { Demolition fees earned } & & 187,000 \\ \hline 19 & 612 & \text { Depreciation expense-Equipment } & 0 & \text { } \\ \hline 20 & 623 & \text { Wages expense } & 41,400 & \\ \hline 21 & 633 & \text { Interest expense } & 3,300 & \\ \hline 22 & 637 & \text { Insurance expense } & 0 & \\ \hline 23 & 640 & \text { Rent expense } & 13,200 & \\ \hline 24 & 652 & \text { Supplies expense } & 0 & \\ \hline 25 & 683 & \text { Property taxes expense } & 9,700 & \\ \hline 26 & 684 & \text { Repairs expense } & 4,700 & \\ \hline 27 & 690 & \text { Utilities expense } & 4,800 & \\ \hline 28 & 3 & \text { Totals } & \$ 324,700 & \$ 324,700 \\ \hline 29 & & & & \\ \hline \end{array}$$

Required

1. Prepare and complete a 10-column work sheet for fiscal year 2015, starting with the unadjusted trial balance and including adjustments based on these additional facts.

a. The supplies available at the end of fiscal year 2015 had a cost of $7,900.

b. The cost of expired insurance for the fiscal year is$10,600.

c. Annual depreciation on equipment is $7,000.

d. The April utilities expense of$800 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $800 amount owed needs to be recorded.

e. The company’s employees have earned$2,000 of accrued wages at fiscal year end.

f. The rent expense incurred and not yet paid or recorded at fiscal year-end is $3,000.

g. Additional property taxes of$550 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 12% per year. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2015 fiscal year. The $300 accrued interest for April has not yet been paid or recorded. (Note that the company is required to make a$10,000 payment toward the note payable during the 2016 fiscal year.)

2. Using information from the completed 10-column work sheet in part 1, journalize the adjusting entries and the closing entries.

3. Prepare the income statement and the statement of owner’s equity for the year ended April 30 and the classified balance sheet at April 30, 2015.

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 the adjusting entry to reflect expiration of insurance coverage for the period was recorded with a $2,000 credit to Prepaid Insurance and a$2,000 debit to Insurance Expense. The adjustment should have been for $10,600.

b. When the adjusted trial balance in the work sheet was completed, assume that the$4,700 Repairs Expense account balance is extended to the Debit column of the balance sheet columns.

Correct any obvious errors in the following closing entries by providing the four corrected closing entries. Assume all accounts held normal account balances in the Adjusted Trial Balance.

Retained Earnings           $263,500
    Income Summary$263,500

Use the following Adjusted Trial Balance to prepare the four journal entries required to close the books:

$$\begin{array}{c} \textbf{Adjusted Trial Balance} \end{array}$$

$$\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{5pt}75,500}\\ \text{Accounts Receivable}&\text{\hspace{10pt}15,500}\\ \text{Accounts Payable}&&\text{\$\hspace{10pt}4,000}\\ \text{Unearned Revenue}&&\text{\hspace{15pt}6,000}\\ \text{Common Stock}&&\text{\hspace{10pt}20,000}\\ \text{Retained Earnings}&&\text{\hspace{10pt}12,500}\\ \text{Dividends}&\text{\hspace{10pt}30,000}\\ \text{Service Revenue}&&\text{\hspace{5pt}355,000}\\ \text{Advertising Expense}&\text{\hspace{10pt}30,000}\\ \text{Rent Expense}&\text{\hspace{10pt}36,000}\\ \text{Utilities Expense}&\text{\hspace{15pt}9,500}\\ \text{Wages Expense}&\underline{\text{\hspace{5pt}201,000}}&\underline{\text{\hspace{39pt}}}\\ &\underline{\underline{\text{\$\hspace{1pt}397,500}}}&\underline{\underline{\text{\$\hspace{1pt}397,500}}}\\ \end{array}$$

Using the following account balances, calculate for the two years presented:

A. working capital

$$\begin{array}{lcc} &\textbf{12/31/2018}&\textbf{12/31/2019}\\[5pt] \text{Accounts payable}&\text{\$\hspace{1pt}45,000}&\text{\$\hspace{1pt}12,600}\\ \text{Accounts receivable}&\text{\hspace{5pt}52,000}&\text{\hspace{5pt}15,200}\\ \text{Cash}&\text{\hspace{5pt}11,500}&\text{\hspace{5pt}19,780}\\ \text{Prepaid insurance}&\text{\hspace{10pt}1,060}&\text{\hspace{10pt}2,400}\\ \text{Salaries payable}&\text{\hspace{10pt}9,400}&\text{\hspace{5pt}12,800}\\ \text{Utilities payable}&\text{\hspace{10pt}3,500}&\text{\hspace{10pt}2,550}\\ \end{array}$$

From the following Company Z adjusted trial balance, prepare simple financial statements, as follows:

B. Retained Earnings Statement

Barry and Kate Ellerson have agreed to purchase a house for $96,500. Universal Savings and Loan Association is willing to lend the money at 6% for 25 years, provided they can make a$10,000 down payment. What is the mortgage total if they finance the closing costs?

Using the following Balance Sheet summary information, calculate for the two companies presented:

B. current ratio

$$\begin{array}{lcc} &\textbf{Company L}&\textbf{Company M}\\[5pt] \text{Current assets}&\text{\$\hspace{1pt}425,000}&\text{\$\hspace{1pt}215,500}\\ \text{Current liabilities}&\text{\hspace{5pt}335,000}&\text{\hspace{5pt}132,700}\\ \end{array}$$

Then:

A. evaluate which company’s liquidity position appears stronger, and why.

The following selected accounts and normal balances existed at year-end. Make the four journal entries required to close the books:

Accounts receivable            $33,200
Prepaid insurance                6,000
Land                            48,000
Accounts payable                27,050
Notes payable                   65,800
Retained earnings                9,350
Dividends                        2,200
Fees earned revenue             70,500
Selling expenses                41,770
Administrative expenses         22,400
Miscellaneous expense            1,835

SDJ, Inc., has net working capital of $1,730, current liabilities of$5,140, and inventory of $2,170. What is the current ratio? What is the quick ratio?

How do the adjusted trial balance and the post-closing trial balance differ? Which accounts are shown in the adjusted trial balance but not in the post-closing trial balance? Which account is shown in both trial balances but with a different balance on each?

Use the following Adjusted Trial Balance to prepare the four journal entries required to close the books:

$$\begin{array}{c} \textbf{Adjusted Trial Balance} \end{array}$$

$$\begin{array}{lcc} &\textbf{Debit}&\textbf{Credit}\\[5pt] \text{Cash}&\text{\$\hspace{5pt}22,900}\\ \text{Prepaid Insurance}&\text{\hspace{15pt}4,000}\\ \text{Fixed Assets}&\text{\hspace{10pt}44,000}\\ \text{Notes Payable}&&\text{\$\hspace{5pt}40,000}\\ \text{Common Stock}&&\text{\hspace{10pt}25,000}\\ \text{Retained Earnings}&&\text{\hspace{10pt}48,350}\\ \text{Dividends}&\text{\hspace{10pt}22,000}\\ \text{Sales Revenue}&&\text{\hspace{5pt}150,000}\\ \text{Automobile Expense}&\text{\hspace{10pt}26,500}\\ \text{Insurance Expense}&\text{\hspace{10pt}20,000}\\ \text{Salaries Expense}&\text{\hspace{5pt}122,500}\\ \text{Supplies Expense}&\underline{\text{\hspace{15pt}1,450}}&\underline{\text{\hspace{39pt}}}\\ &\underline{\underline{\text{\$\hspace{1pt}263,350}}}&\underline{\underline{\text{\$\hspace{1pt}263,350}}}\\ \end{array}$$

SDJ, Inc., has net working capital of $2,170, current liabilities of$4,590, and inventory of $3,860. What is the current ratio? What is the quick ratio?