Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share
South Bend Repair Service Co. 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, 2011:

Data not yet recorded at December 31, 2011 include:
a. Depreciation expense for 2011, $3,000.
b. Insurance expired during 2011, $450.
c. Wages earned by employees but not yet paid on December 31, 2011, $2,100.
d. The supplies count on December 31, 2011, reflected $800 remaining supplies on hand to be used in 2012.
e. Income tax expense was $3,150.
Required:
1. Record the 2011 adjusting entries.
2. Prepare an income statement and a classified balance sheet for 2011 to include the effects of the preceding five transactions.
3. Record the 2011 closingentry.

Transcribed Image Text:

Account Titles Debit Credit Cash $19,600 Accounts receivable 7,000 1,300 Supplies Prepaid insurance 900 27,000 Equipment $12,000 Accumulated depreciation 5,100 Other assets Accounts payable 2,500 Wages payable Income taxes payable Note payable (two years; 12% interest due each December 31) 5,000 Contributed capital (3,000 shares outstanding all year) 16,000 Retained earnings 10,300 Service revenue 48,000 Remaining expenses (not detailed; excludes income tax) 32,900 Income tax expense $93,800 $93,800 Totals