3 edoktcesJay, Incorporated, a party rental business, completed its third year of operations on December 31. Because this is the end of the annualaccounting period, the company bookkeeper prepared the following tentative income statement:Rent revenueExpenses:Salaries and wages expenseMaintenance expenseIncome StatementRent expenseUtilities expenseGas and oil expenseMiscellaneous expenses (items not listed elsewhere)Total expensesIncome$109,00026,50012,0008,8004,3003,0001,00055,600$53,400You are an independent CPA hired by the company to audit the company's accounting systems and review the financial statements. Inyour audit, you developed additional data as follows:a. Salaries and wages for the last three days of December amounting to $730 were not recorded or paid.b. Jay estimated telephone usage at $440 for December, but nothing has been recorded or paid.c. Depreciation on rental autos, amounting to $24,000 for the current year, was not recorded.d. Interest on a $15,000, one-year, 8 percent note payable dated October 1 of the current year was not recorded. The 8 percentinterest is payable on the maturity date of the note.e. Maintenance expense excludes $1,100, representing the cost of maintenance supplies used during the current year.f. The Unearned Rent Revenue account includes $4,100 of revenue to be earned in January of next year.g. The income tax expense is $5,800. 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 7,000 shares of stock areoutstanding all year.3. Compute the total asset turnover ratio based on the corrected information. Assume the beginning-of-the-year balance for Jay'stotal assets was $58,020 and its ending balance for total assets was $65,180.

The income statement is one of the financial statements that is prepared by the companies at the end…

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 7,000 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 $58,020 and its ending balance for total assets was $65,180.

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 7,000 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 $58,020 and its ending balance for total assets was $65,180.

College Accounting (Book Only): A Career Approach

13th Edition

ISBN:9781337280570

Author:Scott, Cathy J.

Publisher:Scott, Cathy J.

Chapter12: Financial Statements, Closing Entries, And Reversing Entries

Section: Chapter Questions

Problem 4PA: The following accounts appear in the ledger of Celso and Company as of June 30, the end of this...

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