Jay, Incorporated, 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 Expenses: Salaries and wages expense Maintenance expense Rent expense Utilities expense Gas and oil expense Miscellaneous expenses (items not listed elsewhere) Total expenses Income $109,000 25,400 10,400 7,200 3,300 3,600 1,800 51,700 $57,300 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. Salaries and wages for the last three days of December amounting to $670 were not recorded or paid. b. Jay estimated telephone usage at $410 for December, but nothing has been recorded or paid. c. Depreciation on rental autos, amounting to $22,500 for the current year, was not recorded. d. Interest on a $16,000, one-year, 8 percent note payable dated October 1 of the current year was not recorded. The 8 percent interest is payable on the maturity date of the note. e. Maintenance expense excludes $2,700, representing the cost of maintenance supplies used during the current year. f. The Unearned Rent Revenue account includes $4,000 of revenue to be earned in January of next year. g. The income tax expense is $4,300. 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 including earnings per share. Assume that 7,900 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 $58,620 and its ending balance for total assets was $65,780. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What adjusting entry for each item (a) through (g) should Jay record at December 31? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Jay, Incorporated, 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 Expenses: Salaries and wages expense Maintenance expense Rent expense Utilities expense Gas and oil expense Miscellaneous expenses (items not listed elsewhere) Total expenses Income $109,000 25,400 10,400 7,200 3,300 3,600 1,800 51,700 $57,300 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. Salaries and wages for the last three days of December amounting to $670 were not recorded or paid. b. Jay estimated telephone usage at $410 for December, but nothing has been recorded or paid. c. Depreciation on rental autos, amounting to $22,500 for the current year, was not recorded. d. Interest on a $16,000, one-year, 8 percent note payable dated October 1 of the current year was not recorded. The 8 percent interest is payable on the maturity date of the note. e. Maintenance expense excludes $2,700, representing the cost of maintenance supplies used during the current year. f. The Unearned Rent Revenue account includes $4,000 of revenue to be earned in January of next year. g. The income tax expense is $4,300. 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 including earnings per share. Assume that 7,900 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 $58,620 and its ending balance for total assets was $65,780. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 What adjusting entry for each item (a) through (g) should Jay record at December 31? Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Jay, Incorporated, 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
Expenses:
Salaries and wages expense
Maintenance expense
Rent expense
Utilities expense
Gas and oil expense
Miscellaneous expenses (items not listed elsewhere)
Total expenses
Income
$109,000
25,400
10,400
7,200
3,300
3,600
1,800
51,700
$57,300
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. Salaries and wages for the last three days of December amounting to $670 were not recorded or paid.
b. Jay estimated telephone usage at $410 for December, but nothing has been recorded or paid.
c. Depreciation on rental autos, amounting to $22,500 for the current year, was not recorded.
d. Interest on a $16,000, one-year, 8 percent note payable dated October 1 of the current year was not recorded. The 8 percent
interest is payable on the maturity date of the note.
e. Maintenance expense excludes $2,700, representing the cost of maintenance supplies used during the current year.
f. The Unearned Rent Revenue account includes $4,000 of revenue to be earned in January of next year.
g. The income tax expense is $4,300. 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 including earnings per share. Assume that 7,900 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 $58,620 and its ending balance for total assets was $65,780.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
What adjusting entry for each item (a) through (g) should Jay record at December 31?
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
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