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.

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.)