P4-7 Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income StatementIncluding Earnings per Share LO4-1, 4-2, 4-4Tunstall, 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, December 31, 2014:Account Titles Debit Credit Cash $42,000 Accounts receivable 11,600 Supplies 900 Prepaid insurance 800 Service trucks 19,000 Accumulated depreciation $9,200 Other assets 8,300 Accounts payable 3,000 Wages payable Income taxes payable Note payable (3 years; 10% interest due each December 31) 17,000 Common stock (5,000 shares outstanding) 400 Additional paid-in capital 19,000 Retained earnings 6,000 Service revenue 61,360 Remaining expenses (not detailed; excludes income tax) 33,360 Income tax expense Totals $115,960 $115,960 Data not yet recorded at December 31, 2014, included: a. The supplies count on December 31, 2014, reflected $300 remaining supplies on hand to be used in 2015.b. Insurance expired during 2014, $800.c. Depreciation expense for 2014, $3,700.d. Wages earned by employees not yet paid on December 31, 2014, $640.e. Income tax expense, $5,540.Required:1 Record the 2014 adjusting entries. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.) Required:2-a. Prepare an income statement that includes the effects of the preceding five transactions. (Round “Earnings per share” to 2 decimal places.) Required:2-b. Prepare a classified balance sheet that includes the effects of the preceding five transactions. (Amounts to be deducted should be indicated by a minus sign.)Required:3 Record the 2014 closing entry. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.)
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