Berry Corporation prepared the following preliminary trial balance. The trial balance and other information was evaluated by Delton Wiser, CPA. Delton has returned a list of proposed adjustments that are necessary to facilitate preparation of correct financial statements for the year ending December 31, 20X3.

BERRY CORPORATION

Trial Balance

December 31, 20X3

Debits

Credits

Cash

$ 30,540

$ -

Accounts receivable

45,000

-

Supplies

7,000

-

Equipment

244,500

-

Accumulated depreciation

-

46,500

Accounts payable

-

12,700

Unearned revenue

-

31,250

Notes payable

-

80,000

Capital stock

-

100,000

Retained earnings, Jan. 1

-

63,200

Dividends

12,000

-

Revenues

-

289,800

Wages expense

214,600

-

Utilities expense

8,700

-

Selling expense

41,610

-

Depreciation expense

12,000

-

Interest expense

7,500

-

$ 623,450

$ 623,450

Delton discovered that 40% of the unearned revenue appearing in the trial balance had actually been earned as of the end of the year.

A physical count of supplies on hand revealed a year-end balance of only $3,000.

Unpaid and unrecorded invoices for utilities for December amounted to $1,500.

The last payday was December 26. Employees are owed an additional $3,900 that has not been recorded.

Additional depreciation of $3,100 needs to be recorded.

(a)

Prepare journal entries relating to the adjustments.

(b)

Prepare an adjusted trial balance (you might utilize a partial worksheet for this task, as shown in the downloadable form).

(c)

Prepare an income statement and statement of retained earnings for 20X3, and a classified balance sheet as of the end of the year.

(d)

Berry's bookkeeper argued with Delton that there was no need to record the adjustments since they have no "net" effect on income. Evaluate whether this observation is true of false, and comment on the appropriateness of this logic.

GENERAL JOURNAL

Page

Date

Accounts

Debit

Credit

BERRY CORPORATION

Worksheet for Adjusted Trial Balance

December 31, 20X3

Trial Balance

Adjustments

Adjusted Trial Balance

Debits

Credits

Debits

Credits

Debits

Credits

Cash

$ 30,540

-

-

-

-

-

Accounts receivable

45,000

-

-

-

-

-

Supplies

7,000

-

-

-

-

-

Equipment

244,500

-

-

-

-

-

Accumulated depreciation

-

$ 46,500

-

-

-

-

Accounts payable

-

12,700

-

-

-

-

Utilities payable

-

-

-

-

-

-

Wages payable

-

-

-

-

-

-

Unearned revenue

-

31,250

-

-

-

-

Notes payable

-

80,000

-

-

-

-

Capital stock

-

100,000

-

-

-

-

Retained earnings, Jan. 1

-

63,200

-

-

-

-

Dividends

12,000

-

-

-

-

-

Revenues

-

289,800

-

-

-

-

Wages expense

214,600

-

-

-

-

-

Utilities expense

8,700

-

-

-

-

-

Selling expense

41,610

-

-

-

-

-

Depreciation expense

12,000

-

-

-

-

-

Supplies expense

-

-

-

-

-

-

Interest expense

7,500

-

-

-

-

-

$623,450

$623,450

$ -

$ -

$ -

$ -

	BERRY CORPORATION
	Income Statement
	For the Year Ending December 31, 20X3
		Revenues
		Services to customers		$ -
		Expenses
		Wages	$ -
		Utilities	-
		Selling	-
		Depreciation	-
		Supplies	-
		Interest	-	-
		Net income		$ -
	BERRY CORPORATION
	Statement of Retained Earnings
	For the Year Ending December 31, 20X3
		Beginning retained earnings		$ -
		Plus: Net income		-
				$ -
		Less: Dividends		-
		Ending retained earnings		$ -
	BERRY CORPORATION
	Balance Sheet
	December 31, 20X3
		Assets
		Current assets
		Cash	$ -
		Accounts receivable	-
		Supplies	-	$ -
		Property, plant & equipment
		Equipment	$ -
		Less: Accumulated depreciation	-	-
		Total assets		$ -
		Liabilities
		Current liabilities
		Accounts payable	$ -
		Utilities payable	-
		Wages payable	-
		Unearned revenue	-	$ -
		Long-term liabilities
		Notes payable		-
		Total liabilities		$ -
		Stockholders' equity
		Capital stock	$ -
		Retained earnings	-
		Total stockholders' equity		-
		Total liabilities and equity		$ -
(d)