Barton Inc. completed its first year of operations on December 31, 2014. Because this is the end of the fiscal year, the company bookkeeper prepared the following tentative statement of earnings:

You are an independent accountant hired by the company to audit its accounting systems and review its financial statements. In your audit, you developed additional data as follows:
a. Unpaid wages for the last three days of December amounting to $ 310 were not recorded.
b. The unpaid $ 400 telephone bill for December 2014 has not been recorded.
c. Depreciation on rental cars, amounting to $ 23,000 for 2014, was not recorded.
d. Interest on a $ 20,000, one- year, 10 percent note payable dated October 1, 2014, was not recorded. The full amount of interest is payable on the maturity date of the note.
e. The deferred rental revenue account has a balance of $ 4,000 as at December 31, 2014, which represents rental revenue for the month of January 2015.
f. Maintenance expense includes $ 1,000, which is the cost of maintenance supplies still on hand at December 31, 2014. These supplies will be used in 2015.
g. The income tax expense is $ 7,000. Payment of income tax will be made in 2015.
Required:
1. For each item, (a) through (g), what adjusting entry, if any, do you recommend that Barton should record at December 31, 2014? If none is required, explain why.
2. Prepare a correct statement of earnings for 2014 in good form, including earnings per share, assuming that 7,000 shares are outstanding. Show computations.
3. Compute the net profit margin ratio based on the corrected information. What does this ratio suggest? If the industry average for net profit margin ratio is 18 percent, what might you infer about Barton?

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Statement of Earnings, 2014 Rental revenue $114,000 Expenses: Salaries and wages expense Maintenance expense Rent expense (on location) Utilities expense Gas and oil expense Miscellaneous expenses (items not listed elsewhere) $28,500 12,000 9,000 4,000 3,000 1,000 Total expenses Net eamings 57,500 $ 56,500