Question

P4-7 (Algo) Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share LO4-1, 4-2, 4-4

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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 on December 31:

Tunstall, Inc. Unadjusted Trial Balance for the Year Ended December 31
	Debit				Credit
Cash		47,400
Accounts receivable		10,600
Supplies		500
Prepaid insurance		640
Service trucks		16,600
Accumulated depreciation						9,000
Other assets		9,660
Accounts payable						2,240
Wages payable
Income taxes payable
Note payable (3 years; 10% interest due each December 31)						13,000
Common stock (5,000 shares outstanding)						1,996
Additional paid-in capital						17,964
Retained earnings						5,800
Service revenue						84,940
Wages expense		16,200
Remaining expenses (not detailed; excludes income tax)		33,340
Income tax expense
Totals		134,940				134,940

Data not yet recorded at December 31 included:

1. The supplies count on December 31 reflected $140 in remaining supplies on hand to be used in the next year.
2. Insurance expired during the current year, $640.
3. Depreciation expense for the current year, $4,200.
4. Wages earned by employees not yet paid on December 31, $670.
5. Income tax expense, $5,680.

P4-7 Part 2

2-a. Prepare an income statement that include the effects of the preceding five transactions. (Round "Earnings per share" to 2 decimal places.)

2-b. Prepare a classified balance sheet that include the effects of the preceding five transactions. (Amounts to be deducted should be indicated by a minus sign.)

Answer 1

Tunstall, Inc.
Income Statement
Operating revenue
Service revenue		84940
Operating expenses
Supplies expense	360	[500-140]
Insurance expense	640
Depreciation expense	4200
Wages expense	16870
Remaining expenses (not detailed; excludes income tax)	33340
Total operating expenses		55410
Net income before tax		29530
Income tax expense		5680
Net Income		23850
Earnings per share [23850/5000]		4.77

Tunstall, Inc.
Balance Sheet
Assets			Liabilities and Stockholders Equity
Current Assets			Current Liabilities
Cash	47400		Accounts Payable	2240
Accounts receivable	10600		Wages payable	670
Supplies	140		Income taxes Payable	5680
Total current assets		58140	Total current liabilities		8590
Service trucks	16600
Less: Accumulated depreciation	13200	3400	Note payable, long term		13000
					13000
Other assets		9660
			Total liabilities		21590
			Stockholders Equity
			Common stock	1996
			Additional paid-in capital	17964
			Retained earnings	29650
			Total stockholders Equity		49610
Total assets		71200	Total liabilities and stockholders Equity		71200