E4-19 (Algo) Reporting a Correct Income Statement with Earnings per Share to Include the Effects of Adjusting Entries and Evaluating Total Asset Turnover as an Auditor LO4-1, 4-2, 4-3 Jay, Inc., a party rental business, completed its third year of operations on December 31. Because this is the end of the annual accounting period, the company bookkeeper prepared the following tentative income statement: Income Statement Rent revenue $ 106,000 Expenses: Salaries and wages expense 25,400 11, 200 Maintenance expense Rent expense 7,600 Utilities expense 3,500 Gas and oil expense 3,500 Miscellaneous expenses (items not listed elsewhere) 1,900 Total expenses 53,100 Income $ 52,900 You are an independent CPA hired by the company to audit the company's accounting systems and review the financial statements. In your audit, you developed additional data as follows: a. Wages for the last three days of December amounting to $630 were not recorded or paid. b. Jay estimated telephone usage at $370 for December, but nothing has been recorded or paid. c. Depreciation on rental autos, amounting to $23,400 for the current year, was not recorded. d. Interest on a $19,000, one-year, 12 percent note payable dated October 1 of the current year was not recorded. The 12 percent interest is payable on the maturity date of the note. e. Maintenance expense excludes $1,400, representing the cost of maintenance supplies used during the current year. f. The Unearned Rent Revenue account includes $4,700 of revenue to be earned in January of next year. g. The income tax expense is $5,000. Payment of income tax will be made next year. Required: 1. What adjusting entry for each item (a) through (g) should Jay record at December 31? 2. Prepare a corrected income statement for the current year in good form, including earnings per share, assuming that 7,600 shares of stock are outstanding all year. 3. Compute the total asset turnover ratio based on the corrected information. Assume the beginning-of-the-year balance for Jay's total assets was $59,020 and its ending balance for total assets was $66,180.