1.Using Thorne's unadjusted trial balance below and facts a-h, complete the following worksheet by filling in the adjustments, adjusted trial balance and financial statements.

Thorne Construction

Unadjusted trial blance

For the year ended July 31, 20X8

Debit

Credit

Cash

12,500

Accounts Receivable

40,000

Allowance for Doubtful Accounts

2,000

Office Supplies

1,850

Prepaid insurance

6,500

Prepaid Rent

Equipment

154,000

Accum. Depreciation - Equipment

38,500

Accounts Payable

23,000

Interest Payable

Wages Payable

Long-term Notes Payable

30,000

W. Thorne, Capital

82,300

W. Thorne, Drawing

25,000

Constuction Revenues

112,000

Bad Debt Expense

Depreciation Expense-Equipment

Wage Expense

29,400

Interest Expense

900

Insurance Expense

Rent Expense

10,800

Office Supplies Expense

Repairs Expense

100

Utilities Expense

6,750

Totals

287,800

287,800

a.A physical count of office supplies as of July 31, 20X8,shows $600 in supplies on hand.

b.On March 1, 20X7, Thorne Construction prepaid $9,000 for an 18-month insurance policy of which 5 months ($2,500) was used up during fiscal year 20X7.

c.The equipment has a 10-year life and no salvage value. Thorne uses straight-line depreciation.

d.July's eletric bill for $520 is not included because it arrived after the worksheet was prepared.

e.There are $1,900 of accrued wages as of the fiscal year end.

f.Thorne's rent of $800 a month is payable quarterly, in advance. Its most recent payment was $2,400O on June 30,^, 20X8, to cover July, August and September 20X8.

g.Thorne estimates bad debt at 3% of credit sales.

h.The long-term note payable bears interest at 1% a month payable by the 10^th of the following month. The interest for July has neither been paid nor recorded.

Thorne Construction Worksheet

July 31, 20X8

Unadjusted

trial balance

Adjustments

Adjusted

trial balance

Income

statement

Balance

sheet

Dr

Cr

Dr

Cr

Dr

Cr

Dr

Cr

Dr

Cr

Cash

12,500

Accounts Receivable

40,000

Allow. for Doubtful Accts

2,000

Office Supplies

1,850

Prepaid Insurance

6,500

Prepaid Rent

Equipment

154,000

Accum. Depr.-Equip.

38,500

Accounts Payable

23,000

Interest Payable

Utilities Payable

Wages Payable

Long-term Notes Payable

30,000

W. Thorne, Capital

82,300

W. Thorne, Drawings

25,000

Constuction Revenues

112,000

Bad Debt Expense

Depr. Exp.-Equipment

Wage Expense

29,400

Interest Expense

900

Insurance Expense

Rent Expense

10,800

Office Supplies Expense

Repairs Expense

100

Utilities Expense

6,750

Totals

287,800

287,800