
Concept explainers
Requirement 1
To prepare:
10-column work sheet using the given information about company’s adjustments
Requirement 1

Answer to Problem 7E
Solution:
The 10-column work sheet using the given information about company’s adjustments −
Unadjusted | Adjustments | Adjusted Trial Balance | ||||
Account Title | Debit | Credit | Debit | Credit | Debit | Credit |
Cash | 16,000 | 16,000 | ||||
34,000 | 34,000 | |||||
Office Supplies | 5,000 | (c) 3,000 | 2,000 | |||
Trucks | 3,50,000 | 3,50,000 | ||||
80,000 | (a)40,000 | 1,20,000 | ||||
Land | 1,60,000 | 1,60,000 | ||||
Accounts Payable | 24,000 | 24,000 | ||||
Interest Payable | 5,000 | (b)1,000 | 6,000 | |||
Long-term notes payable | 1,00,000 | 1,00,000 | ||||
S. Dylan, Capital | 3,07,000 | 3,07,000 | ||||
S. Dylan Withdrawals | 34000 | 34000 | ||||
Delivery fees earned | 2,63,000 | 2,63,000 | ||||
Depreciation Expense - Truck | 40,000 | (a)40,000 | 80,000 | |||
Salaries Expense | 1,10,000 | 1,10,000 | ||||
Office Supplies expense | 15000 | (c) 3,000 | 18,000 | |||
Interest Expense | 5000 | (b) 1,000 | 6,000 | |||
Repairs expense - Trucks | 10,000 | 10,000 | ||||
Totals | 7,79,000 | 7,79,000 | 44,000 | 44,000 | 8,20,000 | 8,20,000 |
The income statement and
Adjusted Trial Balance | Income Statement | Balance Sheet | ||||
Account Title | Debit | Credit | Credit | Debit | Credit | |
Cash | 16,000 | 16,000 | ||||
Accounts Receivables | 34,000 | 34,000 | ||||
Office Supplies | 2,000 | 2,000 | ||||
Trucks | 3,50,000 | 3,50,000 | ||||
Accumulated depreciation − Trucks | 1,20,000 | 1,20,000 | ||||
Land | 1,60,000 | 1,60,000 | ||||
Accounts Payable | 24,000 | 24,000 | ||||
Interest Payable | 6,000 | 6,000 | ||||
Long-term notes payable | 1,00,000 | 1,00,000 | ||||
S. Dylan, Capital | 3,07,000 | 3,12,000 | ||||
S. Dylan Withdrawals | 34,000 | |||||
Delivery fees earned | 2,63,000 | 2,63,000 | ||||
Depreciation Expense - Truck | 80,000 | 80,000 | ||||
Salaries Expense | 1,10,000 | 1,10,000 | ||||
Office Supplies expense | 18,000 | 18,000 | ||||
Interest Expense | 6,000 | 6,000 | ||||
Repairs expense - Trucks | 10,000 | 10,000 | ||||
Totals | 8,20,000 | 8,20,000 | 2,24,000 | 2,63,000 | 5,62,000 | 5,62,000 |
Net Income | 39,000 | |||||
Totals | 8,20,000 | 8,20,000 | 2,63,000 | 2,63,000 | 5,62,000 | 5,62,000 |
Explanation of Solution
The preparation of 10-Column worksheet can be explained as under −
The given adjustments are −
- Unrecorded
Depreciation = $ 40,000 The depreciation will be added to depreciation expense and accumulated depreciation with the amount $ 40,000. - Total of accrued interest = $ 6,000
- Unused office supplies at the year-end = $ 2,000
Given,
- Beginning Office Supplies = $ 5,000
- Ending Office Supplies = $ 2,000
Thus, the office supplies expense is debited with $ 3,000 and office supplies are credited with $ 3,000.
Now, all the adjustments are incorporated in the adjusted trial balance. In the new adjusted trial balance −
- The office supplies are $ 2,000
- The accumulated depreciation is $ 120,000 (i.e. $ 80,000 + $ 40,000)
- The interest payable is $ 6,000
- The depreciation expense on truck = $ 40,000
- The interest expense is $ 6,000
- The office supplies expense is $ 3,000
The income statement is prepared as under −
Given,
- Delivery fees earned = $ 263,000
- Depreciation Expense − Truck = $ 80,000
- Salaries Expense = $ 110,000
- Office Supplies expense = $ 18,000
- Interest Expense = $ 6,000
- Repairs expense − Trucks = $ 10,000
Thus, the net income has been prepared.
The balance sheet is prepared as under −
Given,
- Cash = $ 16,000
- Accounts Receivables = $ 34,000
- Office Supplies = $ 2,000
- Trucks = $ 350,000
- Accumulated depreciation − Trucks = $ 120,000
- Land = $ 160,000
- Accounts Payable = $ 24,000
- Interest Payable = $ 6,000
- Long-term notes payable = $ 100,000
- S. Dylan, Capital − Given,
- Beginning S. Dylan, Capital = $ 307,000
- Net Income = $ 39,000
- S. Dylan, Withdrawals = $ 34,000
Thus, the 10-column work sheet using the given information about company’s adjustments has been prepared.
Requirement 2
- To prepare:
- To determine:
The year-end closing entries for the company
The capital amount to be reported on its year-end balance sheet
Requirement 2

Answer to Problem 7E
Solution:
- The year-end closing entries for the company −
- The capital amount to be reported on its year-end balance sheet = $ 312,000
Accounts Titles and Descriptions | Debit | Credit | |
a. | Depreciation Expense - Truck | 40,000 | |
Accumulated depreciation - Trucks | 40,000 | ||
(To record depreciation on truck) | |||
b. | Interest Expense | 1,000 | |
Interest Payable | 1,000 | ||
(To record remaining interest accrued from $ 6000) | |||
c. | Office Supplies expense | 3,000 | |
Office Supplies | 3,000 | ||
(To record use of supplies during the year) |
Explanation of Solution
- For the closing
journal entries −
The given adjustments are −
- Unrecorded Depreciation = $ 40,000
- Total of accrued interest = $ 6,000
- Unused office supplies at the year-end = $ 2,000
Given,
- Beginning Office Supplies = $ 5,000
- Ending Office Supplies = $ 2,000
Thus, the office supplies expense is debited with $ 3,000 and office supplies are credited with $ 3,000.
- b. For the capital amount to be reported on its year-end balance sheet −
Given,
- Beginning S. Dylan, Capital = $ 307,000
- Net Income = $ 39,000
- S. Dylan, Withdrawals = $ 34,000
The amount of capital to be reported on balance sheet is $ 312,000.
Thus, the year-end closing entries for the company have been prepared and the amount of capital to be reported has been determined.
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