Question

Use ders Earn SOUTH BEND REPAIR SERVICE CO. Unadjusted Trial Balance For the Year Ended December 31 Debit Credit 19,600 7.000 1,300 900 27,000 12,000 er 31 after 5.100 2,500 Cash Accounts receivable Supplies Prepaid insurance Equipment Accumulated depreciation Other assets Accounts payable Wages payable Income taxes payable Note payable (two years: 12% interest due each December 31) Common stock (3,000 shares outstanding all year) Additional paid-in capital Retained earnings Service revenue Wages expense Remaining expenses (not detailed; excludes income tax) Income tax expense Totals 5,000 300 15,700 10,300 48,000 25,200 7.700 DO 93.800 93.800 DO DO Data not yet recorded at December 31 of the current year include 4. Depreciation expense for the current year, $3.000. b. Insurance expired during the current year, $450. c Wages earned by employees but not yet paid on December 31 of the current year, $2,100. 4. The supplies count at the end of the current year reflected $800 in remaining supplies on hand to be used in the next year. 1. Income tax expense was $2.300. Required: 1. Record the adjusting entries. 2. Prepare an income statement and a classified balance sheet for the current year to include the effects of the preceding five transactions. 3. Record the closing entry. just-

Answer 1

Answer-1-

Adjusting entries :

Date	Accounts & Explanation	Debit ($)	Credit ($)
Dec 31	Depreciation expenses a/c	3,000
	Accumulated depreciation		3,000
	(To record depreciation)
Dec 31	Insurance expenses a/c	450
	Prepaid insurance a/c		450
	(to record insurance expenses)
Dec 31	Wages expenses a/c	2,100
	Wages Payable a/c		2,100
	(To record wages)
Dec 31	Supplies expenses a/c	800
	Supplies a/c		800
	(To record supplies)
Dec 31	Income tax expenses a/c	2,300
	Income tax payable a/c		2,300
	(TO record income tax expenses)

SOUTH BEND REPAIR SERVICE CO.
Income Statement
For the Year Ended December 31
Operating revenue:
Service revenue		$ 48,000.00
Operating expenses:
Insurance expense	$ 450.00
Supplies expense	$ 800.00
Wages expense ($25,200+$2,100)	$ 27,300.00
Depreciation expense	$ 3,000.00
Interest Expenses ($5,000*12%)	$ 600.00
Remaining expenses (not detailed)	$ 7,700.00
Total expenses		$ 39,850.00
Income tax		$ 2,300.00
Net income		$ 5,850.00
Earnings per share ($5,850/3,000 shares)		$ 1.95

SOUTH BEND REPAIR SERVICE CO.
Balance Sheet
As on December 31
Assets
Current Assets
Cash	$ 19,600.00
Accounts Receivable	$ 7,000.00
Prepaid Insurance	$ 450.00
Supplies	$        800.00
Total Current Assets		$      27,850.00
Service Trucks (net of Depreciation)	$   15,000.00
Other Assets	$    5,100.00
Total Assets		$      47,950.00
Liabilities
Current Liabilities
Accounts Payable	$    2,500.00
Accrued Wages Payable	$      2,100.00
Income tax Payable	$    2,300.00
Total Current Liabilities		$        6,900.00
Note Payable	$5,000.00
Total Liabilities		$      11,900.00
Stockholders Equity
Capital	$ 16,000.00
Retained Earnings ($10,300+$5,850)	$ 16,150.00
Total Liabilities and Stockholders Equity		$ 47,950.00