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 3,000
Wages payable
Income taxes payable
Note payable (3 years; 10% interest due each December 31) 17,000
Common stock (5,000 shares outstanding) 400
Additional paid-in capital 19,000
Retained earnings 6,000
Service revenue 61,360
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.
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.)
Required:
2-a. Prepare an income statement that includes the effects of the
preceding five transactions. (Round "Earnings per share" to
2 decimal places.)
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.)
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.)
TUTORIAL
PREVIEW
TUNSTALL, INC.
Balance Sheet
At December 31, 2014
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Assets
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Liabilities and Stockholders’ Equity
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Current assets:
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Current liabilities:
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Cash
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42,000
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Accounts payable
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3,000
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Accounts receivable
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11,600
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Wages payable
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640
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Supplies
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300
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Income taxes payable
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5,540
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