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:

Tunstall, Inc. Unadjusted Trial Balance for the Year Ended December 31
	Debit				Credit
Cash		46,800
Accounts receivable		11,400
Supplies		630
Prepaid insurance		680
Service trucks		17,100
Accumulated depreciation						8,400
Other assets		10,460
Accounts payable						2,400
Wages payable
Income taxes payable
Notes payable, long-term						11,000
Common stock (4,000 shares outstanding)						1,886
Additional paid-in capital						16,974
Retained earnings						5,200
Service revenue						90,570
Wages expense		16,200
Remaining expenses (not detailed; excludes income tax)		33,160
Income tax expense
Totals		136,430				136,430

Data not yet recorded at December 31 included:

1. The supplies count on December 31 reflected $200 in remaining supplies on hand to be used in the next year.
2. Insurance expired during the current year, $680.
3. Depreciation expense for the current year, $3,600.
4. Wages earned by employees not yet paid on December 31, $540.
5. Income tax expense, $5,780.

3. Record the closing entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Closing Entries
Event	Particulars			Debit	Credit
1)	Service Revenue			$ 90,570.00
	To Income Summary				$ 90,570.00
2)	Income Summary			$ 60,390.00
	To Wages expense				$ 16,740.00
	To Remaining expenses				$ 37,870.00
	To Income tax expense				$   5,780.00
3)	Income Summary			$ 30,180.00
	To Retained Earnings				$ 30,180.00

Workings:

Adjusting Entries
Event	Particulars			Debit	Credit
a)	Supplies Expense			$    430.00
	To Supplies				$    430.00
	($ 630 - $ 200)
b)	Insurance Expense			$    680.00
	To Prepaid Insurance				$    680.00
c)	Depreciation Expense			$ 3,600.00
	To Accumulated Depreciation				$ 3,600.00
d)	Wages Expense			$    540.00
	To Wages Payable				$    540.00
e)	Income Tax Expense			$ 5,780.00
	To Income Tax Payable				$ 5,780.00

Adjusted Trial Balance
Particulars					Debit	Credit
Cash					$    46,800.00
Accounts receivable					$    11,400.00
Supplies					$         200.00
Service trucks					$    17,100.00
Accumulated depreciation						$    12,000.00
Other assets					$    10,460.00
Accounts payable						$      2,400.00
Wages payable						$         540.00
Income taxes payable						$      5,780.00
Notes payable, long-term						$    11,000.00
Common stock (4,000 shares outstanding)						$      1,886.00
Additional paid-in capital						$    16,974.00
Retained earnings						$      5,200.00
Service revenue						$    90,570.00
Wages expense					$    16,740.00
Remaining expenses					$    37,870.00
Income tax expense					$      5,780.00
Total					$1,46,350.00	$1,46,350.00