Question

Required information [The following information applies to the questions displayed below.) 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: Credit Debit $ 47,400 10,800 580 650 17,800 $ 7,900 9,460 2,230 Account Titles Cash Accounts receivable Supplies Prepaid insurance Service trucks Accumulated depreciation Other assets Accounts payable Wages payable Income taxes payable Note payable (3 years; 10% interest due each December 31) Common stock (4,500 shares outstanding) Additional paid-in capital Retained earnings Service revenue Remaining expenses (not detailed; excludes income tax) Income tax expense Totals 13,000 2,036 18,324 4,200 72,300 33,300 $ 119,990 $ 119,990 Data not yet recorded at December 31 included: a. The supplies count on December 31 reflected $170 in remaining supplies on hand to be used in the next year. b. Insurance expired during the current year, $650. c. Depreciation expense for the current year, $4,100. d. Wages earned by employees not yet paid on December 3, $630. e. Income tax expense, $5,080.

Answer 1

2a) $4,200 TUNSTALL INC. Statement of Retained Earnings For The Year Ended December 31 Retained Earnings - Beginning Balance Add: Net Income $28,130 Less: Dividends Net Increase in Retained Earnings Retained Earnings - Ending Balance [Ref: Income Statement] ($580-$170] TUNSTALL INC. Income Statement For The Year Ended December 31 Service Revenue $72,300 Expenses: Supplies Expense $410 Insurance Expense $650 Depreciation Expense $4,100 Wages Expense Other Expenses $33,300 Total Expenses excluding taxes $39,090 Income Before Income Taxes $33,210 Income Taxes $5,080 Net Income $28,130 $0 $28,130 $32,330 $630 NOTE: Prepaid insurance is expired fully and so it has no balance to report on balance sheet. Updated Accumulated depreciation = $7,900 + $4,100 = $12,000 to report on balance sheet. Earnings Per Share (EPS) $6.25 [--> Net Income / # of Shares outstanding = $28130 / 4500 = $6.25]

2b) Assets Current Assets: Cash Accounts Receivable Supplies Total Current Assets $7,940 TUNSTALL INC. Classified Balance Sheet December 31 Liabilities & Shareholders' Equity Current Liabilities: $47,400 Accounts Payable $2,230 $10,800 Wages Payable $630 $170 Income Taxes Payable $5,080 $58,370 Total Current Liabilities Long-Term Liabilities: Note Payable Total Liabilities $17,800 Shareholders' Equity: $12,000 Common Stock $2,036 $5,800 Additional Paid in Capital $18,324 $9,460 Retained Earnings $32,330 Total Shareholders' Equity $73,630 Total Liabilities & Shareholders' equity $13,000 $20,940 Plant, Property & Equipment: Service Trucks Less: Accumulated Depreciation Plant, Property & Equipment, Net Other Assets [Ref: Statement of Ret. Earnings] $52,690 $73,630 Total Assets