The following unadjusted trial balance is for Adams Construction Co. as of the end of its 2005 fiscal year. The June

The following unadjusted trial balance is for Adams Construction  Co. as of the end of its 2005 fiscal year. The June 30, 2011, credit balance of the owner's capital account was $52,660, and the owner invested $25,000 cash in the company during the 2011 fiscal year.

                                   ADAMS CONSTRUCTION CO.

                                      Unadjusted Trial Balance

                                            June 30, 2011

Numbers    Accounts    Titles                            Debits               Credits

101            Cash                                            $17,500

126            Supplies                                           8,900

128            Prepaid insurance                              6,200

167            Equipment                                     131,000

168            Accumulated depreciation—Equipment                       $25,250

201            Accounts payable                                                         5,800

203             Interest payable                                                              0

208             Rent payable                                                                  0

210              Wages payable                                                              0

213             Property taxes payable                                                    0

251             Long-term notes payable                                            24,000

301             S. Adams, Capital                                                     77,660

302             S. Adams, Withdrawals                     30,000

401             Construction fees earned                                          134,000

612             Depreciation expense—Equipment        0

623             Wages expense                                45,860

633              Interest expense                                2,640

637              Insurance expense                                  0

640              Rent expense                                  13,200

652              Supplies expense                                  0

683              Property taxes expense                     4,600

684              Repairs expense                               2,810

690              Utilities expense                               4,000               _________

Totals                                                             $266,710                $266,710

Required:

1.  Prepare a 10-column work sheet for fiscal year 2005, starting with the unadjusted trial balance and including adjustments based on these additional facts:

a.  The supplies available at the end of fiscal year 2005 had a cost of $3,200.

b.  The cost of expired insurance for the fiscal year is $3,900.

c.  Annual depreciation on equipment is $8,500.

d.  The June utilities expense of $550 is not included in the unadjusted trial balance because the bill arrived after the trial balance was prepared. The $550 amount owed needs to be recorded.

e.  The company's employees have earned $1,600 of accrued wages at fiscal year-end.

f.  The rent expense incurred and not yet paid or recorded at fiscal year-end is $200.

g.  Additional property taxes of $900 have been assessed for this fiscal year but have not been paid or recorded in the accounts.

h. The long-term note payable bears interest at 1% per month. The unadjusted Interest Expense account equals the amount paid for the first 11 months of the 2005 fiscal year. The $240 accrued interest for June has not yet been paid or recorded. (Note that the company is required to make a $5,000 payment toward the note payable during the 2006 fiscal year.)

2.  Use the work sheet to enter the adjusting and closing entries; then journalize them.

3.  Prepare the income statement and the statement of owner's equity for the year ended June 30 and the classified balance sheet at June 30, 2005.

Analysis Component:

4. Analyze the following separate errors and describe how each would affect the the 10-column work sheet. Explain whether the error is likely to be discovered in completing the work sheet and if not, the effect of the error on the financial statements.

a.  Assume that the adjustment for supplies used consisted of a credit to Supplies for $ 3,200 and a debit for $ 3,200 to Supplies Expense.

b.  When the adjusted trial balance in the work sheet is completed, the $ 17,500 Cash balance is incorrectly entered in the Credit column.