Presented below is the unadjusted trial balance of Webster Demolition Company as of June 30, 2014, the

Question:

Presented below is the unadjusted trial balance of Webster Demolition Company as of June 30, 2014, the end of its fiscal year. The owner invested $17,500 cash in the company during the year.

Required
Preparation Component
1. Prepare a 10-column work sheet for 2014, starting with the unadjusted trial balance and including these additional facts:
a. The inventory of supplies at the end of the year had a cost of $6,800.
b. The cost of expired insurance for the year is $5,750.
c. Annual depreciation on the equipment is $8,700.
d. The June utilities expense of $375 was not included in the trial balance because the bill arrived after it was prepared. The $375 amount owed needs to be recorded.
e. The company's employees have earned $1,100 of accrued wages.
f. Interest of $110 for June has not yet been paid or recorded. In addition, the company is required to make a $2,000 payment on the note on August 30, 2014.
2. Use the work sheet to journalize the adjusting and closing entries.
3. Prepare an income statement, a statement of changes in equity, and a classified balance sheet.
Analysis Component:
Analyze the following independent 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. The adjustment for consumption of the insurance coverage credited the Prepaid Insurance account for $5,750 and debited the same amount to the Insurance Expense account.
b. When completing the adjusted trial balance in the work sheet, the $4,200 Repairs Expense account balance was extended to the Debit column for the balance sheet.