Katy McCall opens a tax consulting business calledHorizon Consultants Inc. and completes the following transactions in March:

March 1: As a sole shareholder, McCall invested $125,000 cash along with $45,000 of office equipment in the company.

March 2:Horizon Consultants Inc. completed services for a client and immediately received $4,000 cash.

March 3: Horizon made credit purchases for office equipment for $1,500 and office supplies for $2,100. Payment is due within 10 days.

March 6: Horizon Consultants Inc. pre-paid $6,000 cash for six months' rent for their office.

March 10:Horizon completed a $4,250 project for a client who must pay within 45 days.

March 12: Horizon paid $3,600 cash to settle the account payable created on March 3.

March 19: Horizon paid a $6,000 cash premium on a 12-month insurance policy.

March 22: Horizon received $3,250 cash as a partial payment for the work completed on March 10.

March 25: Horizon completed work for another client for $4,250 on credit.

March 29: McCall paid herself a dividend of $3,000 cash.

March 30: Horizon purchased $750 of additional office supplies on credit.

March 31: Horizon paid $350 cash for this month's utility bill.

Instructions:

Include the effect that each transaction has on the accounting equation.Enter your journals to the general ledger.

Chart of accounts: cash, office equipment, capital stock, prepaid rent, prepaid insurance, office supplies, accounts payable, consulting revenue, accounts receivable, dividend, utility expense.

Part 2:

The following unadjusted trial balance is for Groenke Construction Company as of year-end for the December 31, 20x7 fiscal year. The December 31, 20x6 credit balance of the stockholders' equity account is $50,500, and the stockholders invested $45,000 cash in the company during 20x7.

1. Account TitleDebitCredit

101Cash $15,000

126Supplies $8,500

128Pre-paid insurance $11,200

167Equipment $175,000

168Accumulated depreciation - equipment $19,000

201Accounts payable $9,250

251Long-term notes payable $45,000

301Shareholders' equity $106,900

302Dividends $15,750

401Construction Revenue $153,000

623Wage expense $61,800

633Interest expense $6,250

640Rent expense $15,750

683Property tax expense $12,500

684Repairs expense $6,100

690Utilities expense $5,300

TOTALS$333,150$333,150

Instructions:

1. Journalize the following adjusting entries as of fiscal year-end December 31, 20x7.
2. Post the adjusting entries to an unadjusted trial balance and prepare the adjusted trial balance.
3. Create financial statements, namely: i) the income statement, ii) statement of stockholders' equity, and iii) the balance sheet for 20x7.

Adjustments needed:

1. The supplies available at the end of the fiscal year 20x7 are at a cost of $5,700.
2. The company's employees have earned $3.500 in accrued wages for the fiscal year.
3. The cost of expired insurance for the fiscal year is $8,600.
4. The rent expense not yet paid or recorded in the fiscal year is $2,250.
5. Annual depreciation on equipment is $8,000; no other depreciation adjustment was made in 20x7.
6. The $450 accrued interest for December has not yet been paid and reported.
7. Additional property taxes of $625 have been assessed for the fiscal year but have not yet been paid or recorded in the accounts.
8. The December utilities expense of $425 is not included in the adjusted trial balance, because the bill arrived after the trial balance was prepared. The $425 amount owed needs to be recorded.