Question Jay, Incorporated, a party rental business, completed its third 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 Rent revenue $100,000 Expenses Salaries and wages expense 25,000 Maintenance expense 11,200 Rent expense 7,700 Utilities expense 3,300 Gas and oil expense 2,400 Miscellaneous expenses (items not listed elsewhere) 1,400 Total expenses 51,000 Income $49,000 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 Salaries and wages for the last three days of December amounting to $660 were not recorded or paid Jay estimated telephone usage at $350 for December, but nothing has been recorded or paid Depreciation on rental autos, amounting to $23,200 for the current year, was not recorded Interest on a $10,000, 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 Maintenance expense excludes $1,400, representing the cost of maintenance supplies used during the current year The Unearned Rent Revenue account includes $4,500 of revenue to be earned in January of next year The income tax expense is $4,400 Payment of income tax will be made next year Required A What adjusting entry for each item ( a ) through ( g ) should Jay record at December 31 Salaries and wages for the last three days of December amounting to $660 were not recorded or paid Jay estimated telephone usage at $350 for December, but nothing has been recorded or paid Depreciation on rental autos, amounting to $23,200 for the current year, was not recorded Interest on a $10,000, 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 Maintenance expense excludes $1,400, representing the cost of maintenance supplies used during the current year The Unearned Rent Revenue account includes $4,500 of revenue to be earned in January of next year The income tax expense is $4,400 Payment of income tax will be made next year B Prepare a corrected income statement for the current year including earnings per share Assume that 6,400 shares of stock are outstanding all year C Compute the total asset turnover ratio based on the corrected information Assume the beginning of the year balance for Jay's total assets was $59,020 and its ending balance for total assets was $66,180

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Question Jay, Incorporated, a party rental business, completed its third year of operations on December 31. Because this is the end of the annual accounting

Question

Jay, Incorporated, a party rental business, completed its third 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
Rent revenue	$100,000
Expenses:
Salaries and wages expense	25,000
Maintenance expense	11,200
Rent expense	7,700
Utilities expense	3,300
Gas and oil expense	2,400
Miscellaneous expenses (items not listed elsewhere)	1,400
Total expenses	51,000
Income	$49,000

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:

Salaries and wages for the last three days of December amounting to $660 were not recorded or paid.
Jay estimated telephone usage at $350 for December, but nothing has been recorded or paid.
Depreciation on rental autos, amounting to $23,200 for the current year, was not recorded.
Interest on a $10,000, 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.
Maintenance expense excludes $1,400, representing the cost of maintenance supplies used during the current year.
The Unearned Rent Revenue account includes $4,500 of revenue to be earned in January of next year.
The income tax expense is $4,400. Payment of income tax will be made next year.

Required

A. What adjusting entry for each item (a) through (g) should Jay record at December 31?

Salaries and wages for the last three days of December amounting to $660 were not recorded or paid.

Jay estimated telephone usage at $350 for December, but nothing has been recorded or paid.

Depreciation on rental autos, amounting to $23,200 for the current year, was not recorded.

Interest on a $10,000, 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.

Maintenance expense excludes $1,400, representing the cost of maintenance supplies used during the current year.

The Unearned Rent Revenue account includes $4,500 of revenue to be earned in January of next year.

The income tax expense is $4,400. Payment of income tax will be made next year.

B. Prepare a corrected income statement for the current year including earnings per share. Assume that 6,400 shares of stock are outstanding all year.

C. Compute the total asset turnover ratio based on the corrected information. Assume the beginning-of-the-year balance for Jay's total assets was $59,020 and its ending balance for total assets was $66,180.