Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share (P4-7)
South Bend Repair Service Co. 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, 2011:
Account Titles | Debit | Credit |
Cash | $19,600 |
|
Accounts receivable | 7.000 |
|
Supplies | 1.300 |
|
Prepaid insurance | 900 |
|
Equipment | 27,000 |
|
Accumulated depreciation |
| $12,000 |
Other assets | 5,100 |
|
Accounts payable |
| 2.500 |
Wages payable |
|
|
Income taxes payable |
|
|
Note payable (two years: 12% interest due each December 31) |
| 5.000 |
Contributed capital (3.000 shares outstanding all year) |
| 16.000 |
Retained earnings |
| 10.300 |
Service revenue |
| 48.000 |
Remaining expenses (not detailed: excludes income tax) | 32.900 |
|
Income tax expense |
|
|
Totals | $93.800 | $93.800 |
Data not yet recorded at December 31. 2011 include:
a. Depreciation expense for 2011. $3.000.
b. Insurance expired during 2011. $450.
c. Wages earned by employees but not yet paid on December 31. 2011. $2.100.
d. The supplies count on December 31. 2011. reflected $800 remaining supplies on hand to be used in 2012.
e. Income tax expense was $3.150.
Required:
1. Record the 2011 adjusting entries.
2. Prepare an income statement and a classified balance sheet for 2011 to include the effects of the preceding five transactions.
3. Record the 2011 closing entry.
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