Required information [The following information applies to the questions displayed below.] Tunstall, Incorporated, 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: Cash Accounts receivable Supplies Prepaid insurance Service trucks Accumulated depreciation Other assets Accounts payable Wages payable Income taxes payable Tunstall, Incorporated Unadjusted Trial Balance At December 31 Note payable (3 years; 10% interest due each September 30) Common stock (5,000 shares outstanding) Additional paid-in capital Retained earnings Service revenue Wages expense Remaining expenses (not detailed; excludes income tax) Income tax expense Totals. Debit 42,000 11,600 900 800 19,000 8,300 16,200 17,160 115,960 Credit 9,200 3,000 17,000 400 19,000 6,000 61,360 115,960 Data not yet recorded at December 31 included: a. The supplies count on December 31 reflected $300 in remaining supplies on hand to be used in the next year. b. Insurance expired during the current year, $800. c. Depreciation expense for the current year, $3,700. d. Wages earned by employees not yet paid on December 31, $640. e. Three months of interest expense (for the note payable borrowed on October 1 of the current year) was incurred in the current year. f. Income tax expense, $5,540. 3. Record the closing entry, Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Required information
[The following information applies to the questions displayed below.]
Tunstall, Incorporated, 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:
Cash
Accounts receivable
Supplies
Prepaid insurance
Service trucks
Accumulated depreciation
Other assets
Accounts payable
Wages payable
Income taxes payable
Tunstall, Incorporated
Unadjusted Trial Balance
At December 31
Note payable (3 years; 10% interest due each September 30)
Common stock (5,000 shares outstanding)
Additional paid-in capital
Retained earnings
Service revenue
Wages expense
Remaining expenses (not detailed; excludes income tax)
Income tax expense
Totals
✔
Debit
42,000
11,600
900
800
19,000
8,300
16,200
17,160
115,960
Credit
9,200
3,000
17,000
400
19,000
6,000
61,360
115,960
Data not yet recorded at December 31 included:
a. The supplies count on December 31 reflected $300 in remaining supplies on hand to be used in the next year.
b. Insurance expired during the current year, $800.
c. Depreciation expense for the current year, $3,700.
d. Wages earned by employees not yet paid on December 31, $640.
e. Three months of interest expense (for the note payable borrowed on October 1 of the current year) was incurred in
the current year.
f. Income tax expense, $5,540.
3. Record the closing entry.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fece9fcc4-2577-4cca-9d7d-242bb92cc585%2Fd79eef60-78fa-492f-ac3c-38cab1858b96%2Fe8kfdjp_processed.jpeg&w=3840&q=75)
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