Jay, Inc , a party rental business, completed its first year of operations on December 31, 2014 Because this is the end of the annual accounting period, the company bookkeeper prepared the following tentative income statement Income Statement, 2014 Rental revenue $ 102,000 Expenses Salaries and wages expense 25,800 Maintenance expense 11,700 Rent expense 7,400 Utilities expense 4,600 Gas and oil expense 2,100 Miscellaneous expenses (items not listed elsewhere) 1,600 Total expenses 53,200 Income $ 48,800 You are an independent CPA hired by the company to audit the companys 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 $620 were not recorded or paid b Jay estimated telephone usage at $400 for December 2014, but nothing has been recorded or paid c Depreciation on rental autos, amounting to $22,400 for 2014, was not recorded d Interest on a $11,000, one year, 10 percent note payable dated October 1, 2014, was not recorded The 10 percent interest is payable on the maturity date of the note e Maintenance expense excludes $2,200 representing the cost of maintenance supplies used during 2014 f The Unearned Rental Revenue account includes $4,200 of revenue to be earned in January 2015 g The income tax expense is $4,700 Payment of income tax will be made in 2015 Required 1 What adjusting entry for each item ( a ) through ( g ) should Jay record at December 31, 2014 (If no entry is required for a transaction event, select No journal entry required in the first account field ) 2 Prepare a corrected income statement for 2014 in good form, including earnings per share, assuming that 7,200 shares of stock are outstanding all year (Round Earnings per share to 2 decimal places ) 3 Compute the total asset turnover ratio based on the corrected information Assume Jays December 31, 2013, total assets were $58,620 and its December 31, 2014, total asset were $65,780 (Round your answer to 2 decimal places )

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 06, 2024

Jay, Inc., a party rental business, completed its first year of operations on December 31, 2014. Because this is the end of the annual accounting

Jay, Inc., a party rental business, completed its first year of operations on December 31, 2014. Because this is the end of the annual accounting period, the company bookkeeper prepared the following tentative income statement:

Income Statement, 2014
Rental revenue	$	102,000
Expenses:
Salaries and wages expense		25,800
Maintenance expense		11,700
Rent expense		7,400
Utilities expense		4,600
Gas and oil expense		2,100
Miscellaneous expenses (items not listed elsewhere)		1,600

Total expenses		53,200

Income	$	48,800

You are an independent CPA hired by the company to audit the companys 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 $620 were not recorded or paid.
b.	Jay estimated telephone usage at $400 for December 2014, but nothing has been recorded or paid.
c.	Depreciation on rental autos, amounting to $22,400 for 2014, was not recorded.
d.	Interest on a $11,000, one-year, 10 percent note payable dated October 1, 2014, was not recorded. The 10 percent interest is payable on the maturity date of the note.
e.	Maintenance expense excludes $2,200 representing the cost of maintenance supplies used during 2014.
f.	The Unearned Rental Revenue account includes $4,200 of revenue to be earned in January 2015.
g.	The income tax expense is $4,700. Payment of income tax will be made in 2015.

Required:
1.	What adjusting entry for each item (a) through (g) should Jay record at December 31, 2014? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2	Prepare a corrected income statement for 2014 in good form, including earnings per share, assuming that 7,200 shares of stock are outstanding all year. (Round "Earnings per share" to 2 decimal places.)

3.	Compute the total asset turnover ratio based on the corrected information. Assume Jays December 31, 2013, total assets were $58,620 and its December 31, 2014, total asset were $65,780. (Round your answer to 2 decimal places.)