Question

Required Information P4-7 Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share L04-1, 4-2,4-4 [The following Information applies to the questions displayed below.] 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: Credit Debit $ 42,880 11,660 see Bee 19,000 Account Titles Cash Accounts receivable Supplies Prepaid insurance Service trucks Accumulated depreciation Other assets Accounts payable Wages payable Income taxes payable Note payable (3 years; 10% interest due each Decenber 31) Connon stock (5,880 shares outstanding) Additional paid-in capital 8,300 3,000 17.ee 19.000

Answer 1

1]	ADJUSTING ENTRIES
	Supplies expense	$              600
	Supplies		$            600
	Insurance expense	$              800
	Prepaid insurance		$            800
	Depreciation expense	$          3,700
	Accumulated depreciation		$         3,700
	Wages expense	$              640
	Wages payable		$            640
	Income tax expense	$          5,540
	Income taxes payable		$         5,540
2]	INCOME STATEMENT
	Operating revenue:
	Servicce revenue		$      61,360
	Operating expenses:
	Supplies expense	$              600
	Insurance expense	$              800
	Depreciation expense	$          3,700
	Wages expense	$              640
	Remaining expenses (not detailed)	$        33,360
	Total expenses		$      39,100
	Operating income		$      22,260
	Income tax expense		$         5,540
	Net income		$      16,720
	EPS = 16720/5000 =		$           3.34
3]	BALANCE SHEET
	Assets
	Current Assets:
	Cash	$        42,000
	Accounts receivable	$        11,600
	Supplies	$              300
	Total current assets		$      53,900
	Non-Current Assets:
	Service trucks	$        19,000
	Accumulated depreciation	$        12,900	$         6,100
	Other assets (not detailed)		$         8,300
	Total non current assets
	Total assets		$      68,300
	Total liabilities & Stockholders' equity
	Current liabilities:
	Accounts payable	$          3,000
	Wages payable	$              640
	Income taxes payable	$          5,540
	Total current liabilities		$         9,180
	Note payable, Long term		$      17,000
	Total liabilities		$      26,180
	Stockholders' Equity:
	Common stock	$              400
	APIC	$        19,000
	Retained earnings	$        22,720
	Total stockholders' equity		$      42,120
	Total liabilities & Stockholders' equity		$      68,300
	Retained earnings end balance = 6000+16720 = $22,720
4]	Service revenue	$        61,360
	Income summary		$      61,360
	[To close income accounts]
	Income summary	$        44,640
	Supplies expense		$            600
	Insurance expense		$            800
	Depreciation expense		$         3,700
	Wages expense		$            640
	Remaining expenses (not detailed)		$      33,360
	Income tax expense		$         5,540
	[To close expense accounts]
	Income summary	$        16,720
	Retained earnings		$      16,720
	[To close income summary]