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: Rent revenue Income Statement $101,000 Expenses: Salaries and wages expense 25,600 Maintenance expense 10,700 Rent expense 7,700 Utilities expense 4,500 Gas and oil expense 3,200 Miscellaneous expenses (items not listed 1,200 elsewhere) Total expenses Income 52,900 $48,100 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 $310 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 $10,000, 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 $2,500, 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 including earnings per share. Assume that 7,400 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 $58,220 and its ending balance for total assets was $65,380. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 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. View transaction list Journal entry worksheet 1 2 345 4 5 6 7 Salaries and wages for the last three days of December amounting to $670 were not recorded or paid. Note: Enter debits before credits. Transaction a. General Journal Debit Credit Record entry View general journal Clear entry > Show less▲

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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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:
Rent revenue
Income Statement
$101,000
Expenses:
Salaries and wages expense
25,600
Maintenance expense
10,700
Rent expense
7,700
Utilities expense
4,500
Gas and oil expense
3,200
Miscellaneous expenses (items not listed
1,200
elsewhere)
Total expenses
Income
52,900
$48,100
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 $310 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 $10,000, 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 $2,500, 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 including earnings per share. Assume that 7,400 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 $58,220 and its ending balance for total assets was $65,380.
Complete this question by entering your answers in the tabs below.
Required Required Required
1
2
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.
View transaction list
Journal entry worksheet
1
2
34567
Salaries and wages for the last three days of December
amounting to $670 were not recorded or paid.
Note: Enter debits before credits.
Transaction
a.
General Journal
Debit
Credit
Record entry
View general journal
Clear entry
>
Show less▲
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: Rent revenue Income Statement $101,000 Expenses: Salaries and wages expense 25,600 Maintenance expense 10,700 Rent expense 7,700 Utilities expense 4,500 Gas and oil expense 3,200 Miscellaneous expenses (items not listed 1,200 elsewhere) Total expenses Income 52,900 $48,100 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 $310 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 $10,000, 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 $2,500, 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 including earnings per share. Assume that 7,400 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 $58,220 and its ending balance for total assets was $65,380. Complete this question by entering your answers in the tabs below. Required Required Required 1 2 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. View transaction list Journal entry worksheet 1 2 34567 Salaries and wages for the last three days of December amounting to $670 were not recorded or paid. Note: Enter debits before credits. Transaction a. General Journal Debit Credit Record entry View general journal Clear entry > Show less▲
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