Questions 3- 5 (of 7) (The following information applies to the questions displa

Question

Questions 3- 5 (of 7) (The following information applies to the questions displayed below Tunstall, Inc, a small service company, keeps its records without the help of an accountant. Ater much effort, an outside accountant prepared the following unedjusted S 46,700 Prepaid Insurance s 8,900 Other assets 0,960 payable 2,240 Wages payable Income taxes payable Note payable (3 years; 10% interest due each December 31) Common stock (4,200 shares outstanding) paid-in capital 7064 5,900 3317070,570 S 121,570 S 121,570 Service revenue Income tax expense Data not yet recorded at December 31 included: a. The supplies count on December 31 reflected $220 b. Insurance expired during the current year, $750 d. Wages earned by em in remaining supplies on hand to be used in the next year. expense for the current year, $3,300. not yet paid on December 3,$540 e Income tax expense, $5,580.

Explanation / Answer

Adjusting Journal Entry Accounts Title and explanataions Debit Credit Supplies expense $370    Supplies ($590-$220) $370 To Record Supplies Used Insurance expense Account $750     Prepaid insurance Account $750 To Record Insurance Expense Depreciation expense $3,300     Accumulated depreciation $3,300 To Record Depreciation Expense Wages expense Account Dr. $540      Wages payable $540 To Record Wages Expense & Payable Income tax expense Dr. $5,580      Income tax payable $5,580 To Record Income Tax Expense INCOME STATEMENT Amount In $ Amount In $ Service revenue $70,570 Less: Cost Supplies expense $370 Insurance expense $750 Depreciation expense $3,300 Wages expense $540 Remaining expense $33,170 $38,130 Net income Before tax $32,440 Less: Income tax $5,580 Net Income after tax $26,860 Number of shares $4,200 Earnings per share ($26860/4200)                 6.40 Balance Sheet Asset Current Asset Cash $46,700 Account Receivable $11,700 Supplies (590-370) $220 $58,620 Non Current Asset Service Truck $17,700 Accumulated Dereciation (8900+3300) -$12,200 other Asset $10,960 $16,460 Total Asset $75,080 Liabilities Current Liability Account Payable $2,240 Wages Payable $540 Income Tax Payable $5,580 $8,360 Non Current Laibility Note Payable $15,000 $15,000 Equity Common Stock $1,896 Additional Paid up Capital $17,064 Retained Earning (5900+26860) $32,760 $51,720 Total Liability & Equity $75,080

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