Jay, Inc., 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:

Income Statement
Rent revenue	$	109,000
Expenses:
Salaries and wages expense		26,500
Maintenance expense		12,000
Rent expense		8,800
Utilities expense		4,300
Gas and oil expense		3,000
Miscellaneous expenses (items not listed elsewhere)		1,000
Total expenses		55,600
Income	$	53,400

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:

1. Wages for the last three days of December amounting to $730 were not recorded or paid.
2. Jay estimated telephone usage at $440 for December, but nothing has been recorded or paid.
3. Depreciation on rental autos, amounting to $24,000 for the current year, was not recorded.
4. Interest on a $15,000, 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.
5. Maintenance expense excludes $1,100, representing the cost of maintenance supplies used during the current year.
6. The Unearned Rent Revenue account includes $4,100 of revenue to be earned in January of next year.
7. The income tax expense is $5,800. 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 in good form, including earnings per share, assuming that 7,000 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 $58,020 and its ending balance for total assets was $65,180.

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Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a corrected income statement for the current year in good form, including earnings per share, assuming that 7,000 shares of stock are outstanding all year. (Round "Earnings per share" to 2 decimal places.) JAY, INC. Income Statement Operating revenue: Operating expenses: Total expenses Other item: Earnings per share 0 0 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a corrected income statement for the current year in good form, including earnings per share, assuming that 7,000 shares of stock are outstanding all year. (Round "Earnings per share" to 2 decimal places.) JAY, INC. Income Statement Operating revenue: Operating expenses: Total expenses Other item: Earnings per share 0 0

Answer rating: 100% (QA)

Here are the answers to your questions 1 Adjusting entries a Wages payable 730 Wages expense ... View the full answer