P4-7 Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share LO4-1, 4-2, 4-4

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, December 31, 2014:

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

3000

Wages payable

Income taxes payable

Note payable (3 years; 10% interest due each December 31)

17000

Common stock (5,000 shares outstanding)

400

Additional paid-in capital

19000

Retained earnings

6000

Service revenue

61360

Remaining expenses (not detailed; excludes income tax)

33,360

Income tax expense

Totals

$ 115,960

$ 115,960

Data not yet recorded at December 31, 2014, included:

a.

The supplies count on December 31, 2014, reflected $300 remaining supplies on hand to be used in 2015.

b.

Insurance expired during 2014, $800.

c.

Depreciation expense for 2014, $3,700.

d.

Wages earned by employees not yet paid on December 31, 2014, $640.

e.

Income tax expense, $5,540.

Required:

1

Record the 2014 adjusting entries. (If no entry is required for a transaction/event,

select "No journal entry required" in the first account field.)

Transaction

General Journal

Debit

Credit

a.

b.

c.

d.

e.

Required:

2-a.

Prepare an income statement that includes the effects of the preceding five transactions.

(Round "Earnings per share" to 2 decimal places.)

TUNSTALL, INC.

Income Statement

For the Year Ended December 31, 2014

Operating revenue:

Operating expenses:

Total expenses

-

Net income

$16,720

Earnings per share

Required:

2-b.

Prepare a classified balance sheet that includes the effects of the preceding five transactions.

(Amounts to be deducted should be indicated by a minus sign.)

TUNSTALL, INC.

Balance Sheet

At December 31, 2014

Assets

Liabilities and Stockholders Equity

Current assets:

Current liabilities:

Total current assets

-

Total current liabilities

-

Total liabilities

-

Stockholders' equity:

Total stockholders' equity

-

Total assets

$ -

Total liabilities and stockholders' equity

$ -

Required:

3

Record the 2014 closing entry. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Transaction

General Journal

Debit

Credit

1