Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share

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Recording Adjusting and Closing Entries and Preparing a Balance Sheet and Income Statement Including Earnings per Share (AP4-7)
Ellis, 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, 2011:

Account Titles Debit Credit $ 46,000 Cash 10,400 Accounts receivable Supplies 640 Prepaid insurance 800 Service trucks 1

Data not yet recorded at December 31, 2011, included:
a. The supplies count on December 31, 2011, reflected $240 remaining supplies on hand to be used in 2012.
b. Insurance expired during 2011, $400.
c. Depreciation expense for 2011, $4,200.
d. Wages earned by employees not yet paid on December 31, 2011, $720.
e. Income tax expense, $5,880.
Required:
1. Record the 2011 adjusting entries.
2. Prepare an income statement and a classified balance sheet that include the effects of the preceding five transactions.
3. Record the 2011 closingentry.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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