Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement  

 Including Earnings per Share      

 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:

    

      

  

Data not yet recorded at December 31 included:

  

    a. The supplies count on December 31 reflected $300 in remaining supplies on hand to be used in the next year.

  

    b. Insurance expired during the current year, $800.

  

    c. Depreciation expense for the current year, $3,700.

  

    d. Wages earned by employees not yet paid on December 3, $640.

  

    e. Income tax expense, $5,540.

    

    Required: 

  

1. Record the adjusting entries.

  

2. Prepare an income statement and a classified balance sheet that include the effects of the preceding five transactions.

  

3. Record the closing entry.

 
 

Account Titles Debit Credit Cash 42,000 Accounts receivable 11,600 Supplies 900 Prepaid insurance 800 Service trucks 19,000 Accumulated depreciation 9,200 Other assets 8,300 Accounts payable 3,000 Wages payable Income taxes payable Note payable (3 years; 10% interest due each December 31) Common stock (5,000 shares outstanding) Additional paid-in capital Retained earnings 17,000 400 19,000 6,000 Service revenue 61,360 Remaining expenses (not detailed; excludes income tax) 33,360 Income tax expense Totals T15,960 115,960