The accountant for Castile Construction, Inc., posted adjusting entries (a) through (e) to the accounts at August 31, 2018. Selected balance sheet accounts and all the revenues and expenses of the entity follow in T-account form.

Requirements

1. Explain the purpose of each adjusting entry.

2. Calculate ending balances for the accounts and use the appropriate accounts to prepare the income statement of Castile Construction, Inc., for the month ended August 31, 2018. List expenses in order from largest to smallest.

3. Were the August operations successful? Give the reason for your answer.

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Supplies Accounts Receivable 19,800 1,750| Accumulated Depreciation, Equipment Accumulated Depreciation, Building 2,600 (a) 1,000 (e) 28,000 3,000 (c) 5,200 1,600 |(b) Salaries Payable Service Revenue 1,700 (d) 97,000 1,750 (e) Salaries Expense Depreciation Expense, Equipment 1,600|| Depreciation Expense, Supplies Expense (a) 1,000| Building 3,000| 13,500 1,700 (d) (b) (c)