Challenge Reflaction
Task 2: Sophia has done a great job completing steps 1 through 4 in the accounting cycle; however, she is still unsure of how to complete steps 5 through 7. As a result, she provides you with HHEC Corp.’s trial balance and a list of internal transactions that occurred during the year and asks you to prepare the required adjusting entries, an adjusted trial balance, and HHEC Corp.’s financial statements.
HHEC Corporation Trial Balance
December 31, Year 2
Cash 355,000 Accounts Receivable 72,000 Supplies 85,500 Prepaid Insurance 46,000 Building 150,000 Trucks 350,000 Land 275,000 Office Equipment 78,000 Accounts Payable 18,000 Wages Payable 2,500 Common Stock, par value 550,000 Preferred Stock, par value 625,000 Additional paid-in capital, common stock 125,000 Cleaning Revenue 386,250 Dividends 50,000 Rent expense 205,000 Utilities Expense 19,000 Wages expense 21,250
1,706,750 1,706,750
1. Insurance expires at the rate of $2,000 per month. 2. 75,000 of supplies are on hand at December 31st 3. Annual depreciation on the Building is 15,000 4. Annual Depreciation on the trucks is $35,000 5. Annual depreciation on the office equipmnent $7,800 6. At December 31, HJHEC owed its employees 12,000 7. Revenues earned for cleaning services performed but unrecorded and collected by December 31 totaled $22,000 8. On December 31st customers paid $18,000 for the company's 1 year cleaning package beginning on January 1st
ANSWERS Adjusted Entries
1
Particulars Debit Credit Insurance Expense $ 24,000 Prepaid Insurance $ 24,000 Supplies Expense $ 10,500 Supplies $ 10,500 Depreciation Expense - Buildings $ 15,000 Accumulated Deprecation - Buildings $ 15,000 Depreciation Expense - Office Equipment $ 7,800 Accumulated Deprecation - Office Equipment $ 7,800 Depreciation Expense - Trucks $ 35,000 Accumulated Deprecation - Trucks $ 35,000 Wages Expense $ 12,000 Wages Payable $ 12,000 Accounts Receivable $ 22,000 Cleaning Revenue $ 22,000 TOTAL $ 126,300 $ 126,300
HHEC Corporation AdjustedTrial Balance December 31, Year 2
Trial Balance Adjustments Particulars Dr. Cr. Dr. Cash $ 355,000 Accounts receivable $ 72,000 $ 22,000 Supplies $ 85,500 Prepaid insurance $ 46,000 Building $ 150,000 Land $ 350,000 Trucks $ 275,000 Office equipment $ 78,000 Accumulated depreciation - buildings Accumulated depreciation - trucks Accumulated depreciation - office equipment Accounts payable $ 18,000 Wages payable $ 2,500 Common stock $ 550,000 Preferred stock $ 625,000 Additional paid in capital, common stock $ 125,000 Dividends $ 50,000 Cleaning revenue $ 386,250 Rent expense $ 205,000
2
Utilites expense $ 19,000 Wages expense $ 21,250 $ 12,000 Insurance expense $ 24,000 Supplies expense $ 10,500 Depreciation expense - buildings $ 15,000 Depreciation expense - trucks $ 35,000 Depreciation expense - office equipment $ 7,800
Income Summary 1,706,750 1,706,750 126,300
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Task 2: Sophia has done a great job completing steps 1 through 4 in the accounting cycle; however, she is still unsure of how to complete steps 5 through 7. As a result, she provides you with HHEC Corp.’s trial balance and a list of internal transactions that occurred during the year and asks you to prepare the required adjusting entries, an adjusted trial balance, and HHEC Corp.’s financial statements.
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HHEC Corporation AdjustedTrial Balance December 31, Year 2
Adjusted Trial Balance Income Statement Balance Sheet
Cr. Dr. Cr. Dr. Cr. Dr. Cr. $ 355,000 $ 355,000 $ 94,000 $ 94,000
$ 10,500 $ 75,000 $ 75,000 $ 24,000 $ 22,000 $ 22,000
$ 150,000 $ 150,000 $ 350,000 $ 350,000 $ 275,000 $ 275,000 $ 78,000 $ 78,000
$ 15,000 $ 15,000 $ (15,000) $ 35,000 $ 35,000 $ (35,000) $ 7,800 $ 7,800 $ (7,800)
$ 18,000 $ 18,000 $ 12,000 $ 14,500 $ 14,500
$ 550,000 $ 550,000 $ 625,000 $ 625,000 $ 125,000 $ 125,000
$ 50,000 $ (50,000) $ 22,000 $ 408,250 $ 408,250
$ 205,000 $ 205,000
5
$ 19,000 $ 19,000 $ 33,250 $ 33,250 $ 24,000 $ 24,000 $ 10,500 $ 10,500 $ 15,000 $ 15,000 $ 35,000 $ 35,000 $ 7,800 $ 7,800
$ 58,700 $ 58,700 126,300 1,798,550 1,798,550 408,250 408,250 1,341,200 1,341,200
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