Question
Required information Skip to question [The following information applies to the questions displayed below.] Tunstall, Incorporated, a small service company, keeps its records without the
Required information
Skip to question
[The following information applies to the questions displayed below.]
Tunstall, Incorporated, 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:
Tunstall, Incorporated | ||
---|---|---|
Unadjusted Trial Balance | ||
At December 31 | ||
Debit | Credit | |
Cash | 46,000 | |
Accounts receivable | 12,200 | |
Supplies | 550 | |
Prepaid insurance | 640 | |
Service trucks | 17,900 | |
Accumulated depreciation | 7,800 | |
Other assets | 10,160 | |
Accounts payable | 2,390 | |
Wages payable | ||
Income taxes payable | ||
Notes payable (3 years; 10% interest due each September 30) | 16,000 | |
Common stock (4,200 shares outstanding) | 1,886 | |
Additional paid-in capital | 16,974 | |
Retained earnings | 5,600 | |
Service revenue | 86,350 | |
Wages expense | 16,200 | |
Remaining expenses (not detailed; excludes income tax) | 33,350 | |
Income tax expense | ||
Totals | 137,000 | 137,000 |
Data not yet recorded at December 31 included:
- The supplies count on December 31 reflected $160 in remaining supplies on hand to be used in the next year.
- Insurance expired during the current year, $640.
- Depreciation expense for the current year, $3,900.
- Wages earned by employees not yet paid on December 31, $600.
- Three months of interest expense (for the note payable borrowed on October 1 of the current year) was incurred in the current year.
- Income tax expense, $5,880.
Required:
1. Prepare the adjusting entry needed at December 31.
2-a. Prepare an income statement (with Operating Income and Other Items sections) that include the effects of the preceding six transactions.
2-b. Prepare a classified balance sheet that include the effects of the preceding five transactions.
3. Record the closing entry.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started