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The trial balance columns of the work sheet for Undercover Roofing Inc
The trial balance columns of the work sheet for Undercover Roofing Inc. at March 31, 2006, are as follows.
UNDERCOVER ROOFING INC.
Work Sheet
For the Month Ended March 31, 2006
Trial Balance
Account Titles Dr. Cr.
Cash 2,500
Accounts Receivable 1,800
Roofing Supplies 1,100
Equipment 6,000
Accumulated Depreciation?Equipment 1,200
Accounts Payable 1,400
Unearned Revenue 300
Common Stock 5,000
Retained Earnings 2,000
Dividends 600
Service Revenue 3,000
Salaries Expense 700
Miscellaneous Expense 200
--------------------------
12,900 12,900
Other data:
1. A physical count reveals only $140 of roofing supplies on hand.
2. Depreciation for March is $200.
3. Unearned revenue amounted to $130 after adjustment on March 31.
4. Accrued salaries are $350.
Instructions:
(a) Enter the trial balance on a work sheet and complete the work sheet.
(b) Prepare an income statement and a retained earnings statement for the month of March and a classified balance sheet at March 31. No additional issuances of stock occurred in March.
(c) Journalize the adjusting entries from the adjustments columns of the work sheet.
(d) Journalize the closing entries from the financial statement columns of the work sheet.
Expert Solution
UNDERCOVER ROOFING INC.
Work Sheet
For the Month Ended March 31, 2006
Adjusted Trial Income
Trial Balance Adjustments Balance Statement Balance Sheet
Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr. Dr. Cr.
Account Titles
Cash 2,500 2,500 2,500
Accounts Receivable 1,800 1,800 1,800
Roofing Supplies 1,100 960 140 140
Equipment 6,000 6,000 6,000
Accu. Depr.- Equipment 1,200 200 1,400 1,400
Accounts Payable 1,400 1,400 1,400
Salaries Payable 350 350 350
Unearned Revenue 300 170 130 130
Common Stock 5,000 5,000 5,000
Retained Earnings 2,000 2,000 2,160
Dividends 600 600
Service Revenue 3,000 170 3,170 3,170
Salaries Expense 700 350 1,050 1,050
Depre. Expense - Equipment 200 200 200
Miscellaneous Expense 200 200 200
Roofing Supplies Expense 960 960 960
Totals 12,900 12,900 1,680 1,680 13,450 13,450 10,440 10,440
1. Physical counts reveals only $140 of roofing supplies on hand, which shows that $960 of roofing
supplies is being used.
2. Depreciation Expense for March is $200.
3. Unearned Revenue is reduced to $130, which means services of $170 is rendered to customers.
4. Salaries is accrued to $350.
P4-1A ( b )
UNDERCOVER ROOFING INC.
Income Statement
For the Month Ended March 31, 2006
Service Revenue 3,170
Salaries Expense 1,050
Miscellaneous Expense 200
Roofing Supplies Expense 960
Depreciation Expense 200
Total Expenses 2,410
Net Income 760
UNDERCOVER ROOFING INC.
Statement of Retained Earnings
For the Month Ended March 31, 2006
Balance at the beginning of the month
As originally reported 7,000
Add: Net Income for the month 760
Less: Dividends (600)
Balance at the end of the month 7,160
UNDERCOVER ROOFING INC.
Balance Sheet
March 31, 2006
ASSETS LIABILITIES AND OWNER'S EQUITY
Cash 2,500 Accounts Payable 1,400
Accounts Receivable 1,800 Salaries Payable 350
Roofing Supplies 140 Unearned Revenue 130
Equipment 6,000 Common Stock 5,000
Less: Accu. Depre. 1,400 4,600 Retained Earnings 2,160
Total Assets 9,040 Total Liabilities and Owner's Equity 9,040
P4-1A ( c )
Adjusting Entries
March 31, 2006 Roofing Supplies Expense 960
Roofing Supplies 960
(1,100 - 960 = 140)
March 31, 2006 Depreciation Expense - Equip. 200
Accumulated Depreciation - Equip. 200
March 31, 2006 Salaries Expense 350
Salaries Payable 350
March 31, 2006 Unearned Revenue 170
Service Revenue 1,650 170
P4-1A ( d )
Closing Entries
March 31, 2006 Service Revenue 3,170
Income Summary 3,170
March 31, 2006 Income Summary 1,050
Salaries Expense 1,050
March 31, 2006 Income Summary 200
Depre. Exp. - Equipment 200
March 31, 2006 Income Summary 200
Miscellaneous Expense 200
March 31, 2006 Income Summary 960
Roofing Supplies Expense 960
March 31, 2006 Income Summary 760
Retained Earnings 760
PFA
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