P4-7 Recording Adjusting and Closing Entries and Preparing a Balance Sheet and I
ID: 2484476 • Letter: P
Question
P4-7 Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share LO4-1, 4-2, 4-4 Tunstall, Inc., a small service company, keeps its records without the help of an accountant. After much effort, an outside accountant prepared the following unadjusted trial balance as of the end of the annual accounting period, December 31, 2014: Account Titles Debit Credit Cash $ 42,000 Accounts receivable 11,600 Supplies 900 Prepaid insurance 800 Service trucks 19,000 Accumulated depreciation $ 9,200 Other assets 8,300 Accounts payable 3,000 Wages payable Income taxes payable Note payable (3 years; 10% interest due each December 31) 17,000 Common stock (5,000 shares outstanding) 400 Additional paid-in capital 19,000 Retained earnings 6,000 Service revenue 61,360 Remaining expenses (not detailed; excludes income tax) 33,360 Income tax expense Totals $ 115,960 $ 115,960 Data not yet recorded at December 31, 2014, included: a. The supplies count on December 31, 2014, reflected $300 remaining supplies on hand to be used in 2015. b. Insurance expired during 2014, $800. c. Depreciation expense for 2014, $3,700. d. Wages earned by employees not yet paid on December 31, 2014, $640. e. Income tax expense, $5,540. Required: 1 Record the 2014 adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Transaction General Journal Debit Credit a. b. c. d. e. Required: 2-a. Prepare an income statement that includes the effects of the preceding five transactions. (Round "Earnings per share" to 2 decimal places.) TUNSTALL, INC. Income Statement For the Year Ended December 31, 2014 Operating revenue: Operating expenses: Total expenses - Earnings per share Required: 2-b. Prepare a classified balance sheet that includes the effects of the preceding five transactions. (Amounts to be deducted should be indicated by a minus sign.) TUNSTALL, INC. Balance Sheet At December 31, 2014 Assets Liabilities and Stockholders’ Equity Current assets: Current liabilities: Total current assets - Total current liabilities - Total liabilities - Stockholders' equity: Total stockholders' equity - Total assets $ - Total liabilities and stockholders' equity $ - Required: 3 Record the 2014 closing entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Transaction General Journal Debit Credit 1 P4-7 Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share LO4-1, 4-2, 4-4 Tunstall, Inc., a small service company, keeps its records without the help of an accountant. After much effort, an outside accountant prepared the following unadjusted trial balance as of the end of the annual accounting period, December 31, 2014: Account Titles Debit Credit Cash $ 42,000 Accounts receivable 11,600 Supplies 900 Prepaid insurance 800 Service trucks 19,000 Accumulated depreciation $ 9,200 Other assets 8,300 Accounts payable 3,000 Wages payable Income taxes payable Note payable (3 years; 10% interest due each December 31) 17,000 Common stock (5,000 shares outstanding) 400 Additional paid-in capital 19,000 Retained earnings 6,000 Service revenue 61,360 Remaining expenses (not detailed; excludes income tax) 33,360 Income tax expense Totals $ 115,960 $ 115,960 Data not yet recorded at December 31, 2014, included: a. The supplies count on December 31, 2014, reflected $300 remaining supplies on hand to be used in 2015. b. Insurance expired during 2014, $800. c. Depreciation expense for 2014, $3,700. d. Wages earned by employees not yet paid on December 31, 2014, $640. e. Income tax expense, $5,540. Required: 1 Record the 2014 adjusting entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Transaction General Journal Debit Credit a. b. c. d. e. Required: 2-a. Prepare an income statement that includes the effects of the preceding five transactions. (Round "Earnings per share" to 2 decimal places.) TUNSTALL, INC. Income Statement For the Year Ended December 31, 2014 Operating revenue: Operating expenses: Total expenses - Earnings per share Required: 2-b. Prepare a classified balance sheet that includes the effects of the preceding five transactions. (Amounts to be deducted should be indicated by a minus sign.) TUNSTALL, INC. Balance Sheet At December 31, 2014 Assets Liabilities and Stockholders’ Equity Current assets: Current liabilities: Total current assets - Total current liabilities - Total liabilities - Stockholders' equity: Total stockholders' equity - Total assets $ - Total liabilities and stockholders' equity $ - Required: 3 Record the 2014 closing entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Transaction General Journal Debit Credit 1Explanation / Answer
1. Journal Entries Debit Credit a) Supplies Consumed 600 To Supplies 600 (record for adjustment of supplies on hand) b) Insurance Exp 800 To Prepaid Exp 800 (record expire of Insuarance) c) Depreciation 3700 To Accumulated Dep 3700 (Depreciation Exp Recording) d) Wages 640 To Wages Payable 640 (recording of wages exp, not paid till yet) f) Income Tax Exp 5540 To Income tax exp payable 5540 (Record income tax provision) 2. Income Statement For the year ended 31 December 2014 $ Operating Revenue 61,360 Less:- Operating Exp 33,360 Operating income before adjustment 28,000 Less:- Supplies Conusmed 600 Insurance 800 Depreciation 3,700 Wages 640 5,740 Profit Before tax 22,260 Less: Income tax 5,540 Profit after tax 16,720
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