Question

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 on December 31: Account Titles Debit / Credit

{Debit[Cash $ 47,200 Accounts receivable 11,300 Supplies 580 Prepaid insurance 790 Service trucks 16,300]Debit} {Credit[Accumulated depreciation$ 7,900} {Debit[Other assets 9,260}\]} (Accounts payable 2,320)]credit[ Wages payable Income taxes payable {Credit[Note payable (3 years; 10% interest due each December 31) 15,000 Common stock (4,200 shares outstanding) 1,916 Additional paid-in capital 17,244 Retained earnings 5,600 Service revenue 68,740]Credit} Remaining expenses (not detailed; excludes income tax) 33,290(debit) Income tax expense

totals $ 118,720(Debit) $ 118,72(credit)

Data not yet recorded at December 31 included: The supplies count on December 31 reflected $160 in remaining supplies on hand to be used in the next year. Insurance expired during the current year, $790. Depreciation expense for the current year, $4,100. Wages earned by employees not yet paid on December 3, $690. Income tax expense, $5,480. 2-a. Prepare an income statement that include the effects of the preceding five transactions. Record the closing entry. 2-b. Prepare a classified balance sheet that include the effects of the preceding five transactions

Answer 1

Transaction	General Journal	Debit	Credit
a)	Supplies Expense (580 - 160)	420
	Supplies		420
b)	Insurance Expense	790
	Prepaid Insurance		790
c)	Depreciation Expense	4100
	Accumulated Depreciation		4100
d)	Wage Expense	690
	Wages Payable		690
e)	Income tax expenses	5480
	Income taxes Payable		5480
Tunstall Inc.
Income Statement
For the Year Ended December 31, 2018
Operating Revenue:
Service revenue	$           68,740.00
Operating Expenses:
Supplies Expense (580 - 160)	$                420.00
Insurance expense	$                790.00
Depreciation expense	$             4,100.00
Wages expense	$                690.00
Remaining expenses (not detailed)	$           33,290.00
Total expenses	$           39,290.00
Operating Income	$           29,450.00
Income tax expense	$             5,480.00
Net Income	$           23,970.00
TUNSTALL, INC.
Balance Sheet
At December 31, 2014
Assets			Liabilities and Stockholders’ Equity
Current Assets:			Current Liabilities:
Cash		$         47,200.00	Accounts payable	$   2,320.00
Accounts receivable		$         11,300.00	Wages payable	$      690.00
Supplies		$              160.00	Income taxes payable	$   5,480.00
Total current assets		$         58,660.00	Total current liabilities	$   8,490.00
Service trucks	$           16,300.00		Note payable, long term	$ 15,000.00
Accumulated depreciation  (7900 + 4100)	$         -12,000.00	$           4,300.00	Total liabilities	$ 23,490.00
Other assets (not detailed)		$           9,260.00	Stockholders' Equity
			Common stock	$   1,916.00
			Additional paid-in capital	$ 17,244.00
			Retained earnings 5600+23970	$ 29,570.00
			Total stockholders' equity	$ 48,730.00
Total assets		$         72,220.00	Total liabilities and stockholders' equity	$ 72,220.00
Closing Entry
Account Titles	Debit	Credit
Service Revenue	$           68,740.00
Supplies Expense (580 - 160)		$              420.00
Insurance expense		$              790.00
Depreciation expense		$           4,100.00
Wages expense		$              690.00
Remaining expenses		$         33,290.00
Income tax expense		$           5,480.00
Retained Earnings		$         23,970.00