E12-19 LO12-1, 12-2, 12-3 Reporting a Correct Income Statement with Earnings per Share to Include the Effects of Adjusting Entries and Evaluating Total Asset Turnover as an Auditor Jay, Inc., a party rental business, completed its first year of operations on December 31. Because this is the end of the annual accounting period, the company bookkeeper prepared the following tentative income statement: Income Statement $109,000 Rental revenue Expenses: Salaries and wages expense Maintenance expense Rent expense Utilities expense Gas and oil expense Miscellaneous expenses (items not listed elsewhere) Total expenses Income 26,500 12,000 8,800 4,300 3,000 1,000 55,600 $ 53,400 You are an independent CPA hired by the company to audit the company's accounting systems and review the financial statements. In your audit, you developed additional data as follows: a. Wages for the last three days of December amounting to $730 were not recorded or paid. b. Jay estimated telephone usage at $440 for December, but nothing has been recorded or paid. c. Depreciation on rental autos, amounting to $24,000 for the current year, was not recorded. d. Interest on a $15,000, one-year, 8 percent note payable dated October 1 of the current year was not recorded. The 8 percent interest is payable on the maturity date of the note. e. Maintenance expense excludes $1,100, representing the cost of maintenance supplies used during the current year. f. The Unearned Rental Revenue account includes $4,100 of revenue to be carned in January of next year. 8. The income tax expense is $5,800. Payment of income tax will be made next year. Required: 1. For items (a) through (), what adjusting entry should Jay record at December 317 If none is required, explain why 2. Prepare a corrected income statement for the current year in good form, including earnings per share (rounded to two decimal places), assuming that 7,000 shares of stock are outstanding all year. Show computations. 3. Assume the beginning of the year balance for Jay's total assets was $58,020 and its ending balance for total assets was $65,180. Compute the total asset turnover ratio (rounded to two decimal places) based on the corrected information. What does this ratio suggest? If the average total asset turnover ratio for the industry is 2.31, what might you infer about Jay, Inc.? E12-19 LO12-1, 12-2, 12-3 Reporting a Correct Income Statement with Earnings per Share to Include the Effects of Adjusting Entries and Evaluating Total Asset Turnover as an Auditor Jay, Inc., a party rental business, completed its first year of operations on December 31. Because this is the end of the annual accounting period, the company bookkeeper prepared the following tentative income statement: Income Statement $109,000 Rental revenue Expenses: Salaries and wages expense Maintenance expense Rent expense Utilities expense Gas and oil expense Miscellaneous expenses (items not listed elsewhere) Total expenses Income 26,500 12,000 8,800 4,300 3,000 1,000 55,600 $ 53,400 You are an independent CPA hired by the company to audit the company's accounting systems and review the financial statements. In your audit, you developed additional data as follows: a. Wages for the last three days of December amounting to $730 were not recorded or paid. b. Jay estimated telephone usage at $440 for December, but nothing has been recorded or paid. c. Depreciation on rental autos, amounting to $24,000 for the current year, was not recorded. d. Interest on a $15,000, one-year, 8 percent note payable dated October 1 of the current year was not recorded. The 8 percent interest is payable on the maturity date of the note. e. Maintenance expense excludes $1,100, representing the cost of maintenance supplies used during the current year. f. The Unearned Rental Revenue account includes $4,100 of revenue to be carned in January of next year. 8. The income tax expense is $5,800. Payment of income tax will be made next year. Required: 1. For items (a) through (), what adjusting entry should Jay record at December 317 If none is required, explain why 2. Prepare a corrected income statement for the current year in good form, including earnings per share (rounded to two decimal places), assuming that 7,000 shares of stock are outstanding all year. Show computations. 3. Assume the beginning of the year balance for Jay's total assets was $58,020 and its ending balance for total assets was $65,180. Compute the total asset turnover ratio (rounded to two decimal places) based on the corrected information. What does this ratio suggest? If the average total asset turnover ratio for the industry is 2.31, what might you infer about Jay, Inc