REQUIREMENT 1
TO CALCULATE
We need to calculate the 10 column worksheet for the fiscal year 2015.
SOLUTIONS
CONSTRUCTION COMPANY | ||||||||||
10 COLOUMN WORKSHEET | ||||||||||
As on 31st December, 2015 | ||||||||||
PARTICULARS | UNADJUSTED | ADJUSTMENTS | ADJUSTED TRAIL BALANCE | INCOME STATEMENT | OWNERS EQUITY | |||||
DEBIT ($) | CREDIT($) | DEBIT ($) | CREDIT($) | DEBIT ($) | CREDIT ($) | DEBIT ($) | CREDIT ($) | DEBIT($) | CREDIT ($) | |
Cash | 18500 | | | | 18500 | | | | 18500 | |
Prepaid Insurance | 7200 | | | 3800 | 3400 | | | | 3400 | |
Office supplies | 9900 | | | 6600 | 3300 | | | | 3300 | |
Equipments | 132,000 | | | | 132000 | | | | 132000 | |
| 26,250 | | 8400 | | 34,650 | | | | 34650 | |
Account payable | | 6800 | | | | 6800 | | | | 6800 |
Notes Payable | | | | 5000 | | 5000 | | | | 5000 |
Interest payable | | 0 | | 250 | | 250 | | | | 250 |
Rent payable | | 0 | | 500 | | 500 | | | | 500 |
Utilities Payable | | 0 | | 650 | | 650 | | | | 650 |
Wages payable | | 0 | | 1800 | | 1800 | | | | 1800 |
Property tax payable | | 0 | | 1000 | | 1000 | | | | 1000 |
Long Terms Note payable | | 25,000 | 5000 | | | 20,000 | | | | 20000 |
V. Ace capital | | 88660 | | | | 88660 | | | | 88660 |
V. ace withdrawals | 33,000 | | | | 33000 | | | | 33000 | |
Construction Fees earned | | 132100 | | | | 132100 | | 132100 | | |
Depreciation Expenses | 0 | | 8400 | | 8400 | | 8400 | | | |
Wages Expenses | 46860 | | 1800 | | 48660 | | 48660 | | | |
Supplies Expenses | 0 | | 6600 | | 6600 | | 6600 | | | |
Interest Expenses | 2750 | | 250 | | 3000 | | 3000 | | | |
Insurance Expenses | 0 | | 3800 | | 3800 | | 3800 | | | |
Property tax expenses | 7800 | | 1000 | | 8800 | | 8800 | | | |
Rent Expenses | 12000 | | 500 | | 12500 | | 12500 | | | |
Repairs Expenses | 2910 | | | | 2910 | | 2910 | | | |
Utilities Expenses | 5890 | | 650 | | 6540 | | 6540 | | | |
TOTAL | 278810 | 278810 | 28000 | 28000 | 291410 | 291410 | 101210 | 132100 | 190200 | 159310 |
Net Income | | | | | | | 30890 | | | 30890 |
TOTAL | | | | | | | 132100 | 132100 | 190200 | 190200 |
EXPLANATION
A 10 Column worksheet starts with Unadjusted Trail balance in which we have to do the adjustments.
- Given in the sum closing supplies $3300 will be reflect as Supplies in balance sheet and difference $6600 will be charged as expenses.
- The insurance expired will be charged to expenses and remaining unexpired insurance will be shown as Prepaid Insurance in the balance sheet.
- Annual Depreciation will be charged to expenses and added to Accumulated depreciation account. Hence Annual Depreciation of $8400 is debited as Depreciation expense and also credited to Accumulated depreciation account.
- Utilities expenses of $650 is recorded as Expenses and the Utilities payable account as a liabilities is also created of $650.
- Accrued wages of $1800 were debited as an Expenses and Wages payable were credited at the same amount showing as liabilities payable.
- Outstanding rent expenses were also recorded as expenses and debited and simultaneously a rent payable account is created as a liability.
- Another liability of Property tax has not been paid but must be recorded in books as per accrual basis and hence debited as an expense and simultaneously liabilities credit under property tax payable account.
- Accrued expenses for 1 month must be recorded as per accrual basis of accounting and hence $250 must be recorded as an expenses.
Also Notes payable of $5000 is to be shown as current liabilities because payable is due in less than 1year so we have to debit the Long term loan payable and credit the short term loan payable to reduce the long term loan payable and create a new short term loan payable.
REQUIREMENT 1

Answer to Problem 2APSA
SOLUTIONS
CONSTRUCTION COMPANY | ||||||||||
10 COLOUMN WORKSHEET | ||||||||||
As on 31st December, 2015 | ||||||||||
PARTICULARS | UNADJUSTED TRIAL BALANCE | ADJUSTMENTS | ADJUSTED TRAIL BALANCE | INCOME STATEMENT | OWNERS EQUITY BALANCE SHEET | |||||
DEBIT ($) | CREDIT($) | DEBIT ($) | CREDIT($) | DEBIT ($) | CREDIT ($) | DEBIT ($) | CREDIT ($) | DEBIT($) | CREDIT ($) | |
Cash | 18500 | | | | 18500 | | | | 18500 | |
Prepaid Insurance | 7200 | | | 3800 | 3400 | | | | 3400 | |
Office supplies | 9900 | | | 6600 | 3300 | | | | 3300 | |
Equipments | 132,000 | | | | 132000 | | | | 132000 | |
Accumulated | | 26,250 | | 8400 | | 34,650 | | | | 34650 |
Account payable | | 6800 | | | | 6800 | | | | 6800 |
Notes Payable | | | | 5000 | | 5000 | | | | 5000 |
Interest payable | | 0 | | 250 | | 250 | | | | 250 |
Rent payable | | 0 | | 500 | | 500 | | | | 500 |
Utilities Payable | | 0 | | 650 | | 650 | | | | 650 |
Wages payable | | 0 | | 1800 | | 1800 | | | | 1800 |
Property tax payable | | 0 | | 1000 | | 1000 | | | | 1000 |
Long Terms Note payable | | 25,000 | 5000 | | | 20,000 | | | | 20000 |
V. Ace capital | | 88660 | | | | 88660 | | | | 88660 |
V. ace withdrawals | 33,000 | | | | 33000 | | | | 33000 | |
Construction Fees earned | | 132100 | | | | 132100 | | 132100 | | |
Depreciation Expenses | 0 | | 8400 | | 8400 | | 8400 | | | |
Wages Expenses | 46860 | | 1800 | | 48660 | | 48660 | | | |
Supplies Expenses | 0 | | 6600 | | 6600 | | 6600 | | | |
Interest Expenses | 2750 | | 250 | | 3000 | | 3000 | | | |
Insurance Expenses | 0 | | 3800 | | 3800 | | 3800 | | | |
Property tax expenses | 7800 | | 1000 | | 8800 | | 8800 | | | |
Rent Expenses | 12000 | | 500 | | 12500 | | 12500 | | | |
Repairs Expenses | 2910 | | | | 2910 | | 2910 | | | |
Utilities Expenses | 5890 | | 650 | | 6540 | | 6540 | | | |
TOTAL | 278810 | 278810 | 28000 | 28000 | 291410 | 291410 | 101210 | 132100 | 190200 | 159310 |
Net Income | | | | | | | 30890 | | | 30890 |
TOTAL | | | | | | | 132100 | 132100 | 190200 | 190200 |
Explanation of Solution
A 10 Column worksheet starts with Unadjusted Trail balance in which we have to do the adjustments.
- Given in the sum closing supplies $3300 will be reflect as Supplies in balance sheet and difference $6600 will be charged as expenses.
- The insurance expired will be charged to expenses and remaining unexpired insurance will be shown as Prepaid Insurance in the balance sheet.
- Annual Depreciation will be charged to expenses and added to Accumulated depreciation account. Hence Annual Depreciation of $8400 is debited as Depreciation expense and also credited to Accumulated depreciation account.
- Utilities expenses of $650 is recorded as Expenses and the Utilities payable account as a liabilities is also created of $650.
- Accrued wages of $1800 were debited as an Expenses and Wages payable were credited at the same amount showing as liabilities payable.
- Outstanding rent expenses were also recorded as expenses and debited and simultaneously a rent payable account is created as a liability.
- Another liability of Property tax has not been paid but must be recorded in books as per accrual basis and hence debited as an expense and simultaneously liabilities credit under property tax payable account.
- Accrued expenses for 1 month must be recorded as per accrual basis of accounting and hence $250 must be recorded as an expenses.
Also Notes payable of $5000 is to be shown as current liabilities because payable is due in less than 1year so we have to debit the Long term loan payable and credit the short term loan payable to reduce the long term loan payable and create a new short term loan payable.
Hence we have analyze both the scenario and discovered that both will have effect on the 10 column worksheet and error A cannot be identified on the face of financial statement but error B can
REQUIREMENT 2
TO CALCULATE
We need to calculate the
SOULTION
ADJUSTING ENTRIES IN THE BOOKS OF ACE CONSTRUCTION COMPANY | |||||
FOR THE YEAR ENDED 31st DECEMBER, 2015 | |||||
No. | PARTICULARS | DEBIT ($) | CREDIT ($) | ||
a. | Supplies Expenses | 6,600 | | ||
| Office supplies | | 6,600 | ||
| (Being supplies Expenses incurred recorded) | | | ||
| | | | ||
b. | Insurance Expenses | 3,800 | | ||
| Prepaid Insurance | | 3,800 | ||
| (Being Insurance Expenses expired recorded) | | | ||
| | 8,400 | | ||
c. | Depreciation Expenses | | 8,400 | ||
| Accumulated Depreciation | | | ||
| (Being Depreciation Expenses recorded) | | | ||
| | | | ||
d. | Utilities Expenses | 650 | | ||
| Utilities Payable | | 650 | ||
| (Being Utilities Expenses recorded) | | | ||
| | | | ||
e. | Wages Expenses | 1800 | | ||
| Wages Payable | | 1800 | ||
| (Being Wages Expenses Incurred Recorded) | | | ||
| | | | ||
f. | Rent Expenses | 500 | | ||
| Rent payable | | 500 | ||
| (Being Rent Expenses Incurred recorded) | | | ||
| | | | ||
g. | Property Tax Expenses | 1000 | | ||
| Property Tax Payable | | 1000 | ||
(Being Property Tax expenses Recorded) | | | |||
| | | | ||
h. | Interest Expenses | 250 | | ||
| Interest Payable | | 250 | ||
| (Being Interest Expenses Recognized) | | | ||
| | | | ||
Long term Notes Payable | 5000 | | |||
| Current Notes Payable | | 5000 | ||
| (Being 5000 Notes payable recorded as current liabilities and deducted from long term notes) | | | ||
| | |
REQUIREMENT 2

Explanation of Solution
- Given in the sum closing supplies $3300 will be reflect as Supplies in balance sheet and difference $6600 will be charged as expenses.
- The insurance expired will be charged to expenses and remaining unexpired insurance will be shown as Prepaid Insurance in the balance sheet.
- Annual Depreciation will be charged to expenses and added to Accumulated depreciation account. Hence Annual Depreciation of $8400 is debited as Depreciation expense and also credited to Accumulated depreciation account.
- Utilities expenses of $650 is recorded as Expenses and the Utilities payable account as a liabilities is also created of $650.
- Accrued wages of $1800 were debited as an Expenses and Wages payable were credited at the same amount showing as liabilities payable.
- Outstanding rent expenses were also recorded as expenses and debited and simultaneously a rent payable account is created as a liability.
- Another liability of Property tax has not been paid but must be recorded in books as per accrual basis and hence debited as an expense and simultaneously liabilities credit under property tax payable account.
- Accrued expenses for 1 month must be recorded as per accrual basis of accounting and hence $250 must be recorded as an expenses.
Also Notes payable of $5000 is to be shown as current liabilities because payable is due in less than 1year so we have to debit the Long term loan payable and credit the short term loan payable to reduce the long term loan payable and create a new short term loan payable.
TO PREPARE
We need to prepare the closing entries to be made for the year ended 2015.
TO PREPARE

Answer to Problem 2APSA
SOLUTION
CLOSING ENTRIES IN THE BOOKS OF ACE CONSTRUCTION COMPANY | |||||
FOR THE YEAR ENDED 31st DECEMBER, 2015 | |||||
No. | PARTICULARS | DEBIT ($) | CREDIT ($) | ||
1 | REVENUE | | | ||
| Construction Fee Earned | 132,100 | | ||
| Income Summary | | 132,100 | ||
| | | | ||
2 | EXPENSES | | | ||
| Income Summary | 101,210 | | ||
| Depreciation Expenses | | 8,400 | ||
| Wages Expenses | | 48,660 | ||
| Insurance Expenses | | 3,800 | ||
| Interest Expenses | | 3,000 | ||
| Property tax expenses | | 8,800 | ||
| Repairs Expenses | | 2,910 | ||
| Utilities Expenses | | 6,540 | ||
| Rent expenses | | 12,500 | ||
| Supplies expenses | | 6,600 | ||
| | | | ||
3 | NET INCOME FOR THE YEAR TRANSFER TO CAPITAL | | | ||
| Income Summary | 30,890 | | ||
| V Ace Capital | | 30,890 | ||
| | | | ||
4 | REDUCTION IN OWNERS CAPITAL DUE TO DRAWING | | | ||
| V Ace Capital | 33,000 | | ||
| V Ace Withdrawals | | 33,000 |
Explanation of Solution
- The first journal entries represent the Income that is made during the year. We transfer the income to a notional account we create named as Income summary account in which we transfer the Income and Expenses and any excess or deficit is adjusted with the capital Account. Since revenue is a credit item so we debit the revenue and credit the income summary account. In this way we have transfer the revenue to Income summary account.
- In the second entry we transfer all the expenses to income summary account by debiting the Income summary and crediting all the expenses during the year.
- In the 3rd entry we find out the surplus in income summary account after the debit and credit od revenue and expenses and transfer the surplus to capital account. The surplus calculated as shown below:-
- In this we have simply reduced the partners’ capital account by the amount of withdrawals they made during the year.
REQUIREMENT 3A
TO PREPARE We need to prepare the Income statement account and closing balance of owner’s equity of Ace Construction Company for the fiscal year 2015.
REQUIREMENT 3A

Answer to Problem 2APSA
SOLUTION
ACE CONSTRUCTION COMAPANY | ||||
Income Statement Account | ||||
For the year ended 31 December, 2015 | ||||
REVENUES | ||||
Construction Fee Earned | 132,100 | |||
EXPENSES | ||||
Depreciation Expenses | 8,400 | |||
Wages Expenses | 48,660 | |||
Insurance Expenses | 3,800 | |||
Interest Expenses | 3,000 | |||
Property tax expenses | 8,800 | |||
Repairs Expenses | 2,910 | |||
Utilities Expenses | 6,540 | |||
Rent expenses | 12,500 | |||
Supplies expenses | 6,600 | |||
TOTAL EXPENSES | 101,210 | |||
NET INCOME | 30,890 | |||
ACE CONSTRUCTION COMPANY | ||||
Statement of Owners Equity | ||||
For the year ended 31 December, 2015 | ||||
V ACE, Capital as on, 31 December, 2014 | 88,660 | |||
Add: Net Income | 30,890 | |||
119,550 | ||||
Less: Withdrawals | 33000 | |||
V ACE, Capital as on, 31 December, 2015 | 86,550 |
Explanation of Solution
1. An income statement account is the Net income during the period. It can be calculated as follows:
2. A closing balance of owners’ equity can be calculated as shown below:-
REQUIREMENT 3A
TO CALCULATE We need to calculate the Classified Balance sheet for the fiscal year 2015 of Ace Construction Company.
REQUIREMENT 3A

Answer to Problem 2APSA
SOLUTION
ACE CONSTRUCTION COMPANY Classified Balance sheet As on December 31, 2015 | ||||
ASSETS | AMOUNT ($) | LIABILITY & EQUITY | AMOUNT ($) | |
I. CURRENT ASSETS | | I. CURRENT LIABILITIES | | |
Cash | $18,500.00 | Account payable | $6,800.00 | |
Prepaid Insurance | $3,400.00 | Notes Payable | $5,000.00 | |
Office supplies | $3,300.00 | Interest payable | $250.00 | |
Total Current Assets= | $25,200.00 | Rent payable | $500.00 | |
| | Utilities Payable | $650.00 | |
II. NON CURRENT ASSET | | Wages payable | $1,800.00 | |
Equipment $132,000 | | Property tax payable | $1,000.00 | |
Less: Accumulated Depreciation $34,650 | $97,350.00 | Total Current Liabilities= | $16,000.00 | |
| | II. NON CURRENT LIABILITIES | | |
| | Long Terms Note payable | $20,000.00 | |
| | TOTAL LIABILITIES = | $36,000.00 | |
| | III. | | |
| | Owners Capital | $86,550.00 | |
TOTAL ASSET= | $122,550.00 | TOTAL EQUITY AND LIABILITIES= | $122,550.00 |
Explanation of Solution
A Classified balance sheet consists of 2 parts in Assets and Owners Equity&liabilities which is shown as Current and Non Current Items.
FOR ASSETS SIDE WE HAVE,
FOR LIABILITIES SIDE WE HAVE,
REQUIREMENT 4
TO CALCULATE We need to analyze the effect of this error on the 10 column worksheet and then describe wether this error will be discovered on balance sheet or not.
REQUIREMENT 4

Answer to Problem 2APSA
SOLUTION
- Will have effect on 10 column worksheet and this error cannot be discovered in the balance sheet.
- Will have effect on 10 column worksheet and this error can be discovered in balance sheet.
Explanation of Solution
A) In this scenario, there was a difference of 3,300 supplies expense that where not charged. Hence the supplies were overvalued and expenses were undervalued. This Error would not likely to be discovered only with the worksheet. As the overvalue and undervalue will automatically balance the work book and the error cannot be discovered on the financial statement. In financial statement Supplies will be overvalued by 3,300 and Ace capital will be overvalued by 3,300.
B) In this scenario Cash balance will be undervalued. As the cash was credited incorrectly by $18,500. This effect can be seen in workbook as the cash balance will be lower by $18,500. So the workbook will not match. This error can be discovered in the workbook itself.
Hence we have analyze both the scenario and discovered that both will have effect on the 10 column worksheet and error A cannot be identified on the face of financial statement but error B can
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