Assignment: Financial Accounting 2

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P4-7

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.)
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	-
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

P4-7 Check Figures

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	- 0
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	- 0	Total current liabilities	- 0
Total liabilities	- 0
Stockholders' equity:
Total stockholders' equity	- 0
Total assets	$ - 0	Total liabilities and stockholders' equity	$ - 0
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

Sheet2

List 1	List 2	List 2Balance Sheet	List 3	List 4
No journal entry required	Accounts payable	Accounts payable	Net income	Operating income
Accounts payable	Accounts receivable	Accounts receivable	Net loss	Operating loss
Accounts receivable	Accrued expenses payable	Accrued expenses payable
Accrued expenses payable	Accumulated depreciation	Accumulated depreciation
Accumulated depreciation	Additional paid-in capital	Additional paid-in capital
Additional paid-in capital	Advertising expense	Advertising expense
Advertising expense	Cash	Cash
Cash	Commission expense	Commission expense
Commission expense	Common stock	Common stock
Common stock	Consulting expense	Consulting expense
Consulting expense	Cost of goods sold	Cost of goods sold
Cost of goods sold	Depreciation expense	Depreciation expense
Depreciation expense	Equipment	Equipment
Equipment	Fee revenue	Fee revenue
Fee revenue	Gain on sale of land	Gain on sale of land
Gain on sale of land	Income taxes expense	Income taxes expense
Income taxes expense	Income taxes payable	Income taxes payable
Income taxes payable	Insurance expense	Insurance expense
Insurance expense	Interest expense	Interest expense
Interest expense	Interest payable	Interest payable
Interest payable	Interest receivable	Interest receivable
Interest receivable	Interest revenue	Interest revenue
Interest revenue	Inventory	Inventory
Inventory	Investments	Investments
Investments	Land	Land
Land	Long-term debt	Long-term debt
Long-term debt	Maintenance expense	Maintenance expense
Maintenance expense	Notes payable	Notes payable, long-term
Notes payable	Notes payable, long-term	Notes receivable
Notes payable, long-term	Notes receivable	Other assets
Notes receivable	Other assets	Prepaid expenses
Other assets	Prepaid insurance	Prepaid rent
Prepaid insurance	Prepaid rent	Property tax expense
Prepaid rent	Property tax expense	Property tax payable
Property tax expense	Property tax payable	Property, plant and equipment
Property tax payable	Property, plant and equipment	Remaining expenses (not detailed)
Property, plant and equipment	Remaining expenses (not detailed)	Rent expense
Rent expense	Rent expense	Rent receivable
Rent receivable	Rent receivable	Rent revenue
Rent revenue	Rent revenue	Repairs expense
Repairs expense	Repairs expense	Research and development expense
Research and development expense	Research and development expense	Retained earnings
Retained earnings	Retained earnings	Salaries expense
Sales revenue	Salary expense	Sales revenue
Service revenue	Sales revenue	Service revenue
Supplies	Service revenue	Service trucks
Supplies expense	Supplies	Supplies
Unearned revenue	Supplies expense	Supplies expense
Utilities expense	Unearned revenue	Unearned revenue
Utilities payable	Utilities expense	Utilities expense
Wages expense	Utilities payable	Utilities payable
Wages payable	Wages expense	Wages expense
Wages payable	Wages payable