Company, with outstanding common stock of $30,000, had the following assets and 14. Balance sheet; Income statement. On December 31, 19A, Morrisville Canning liabilities: $ 5,000 10,000 Cash.. 6,000 2,000 Accounts receivable.. Finished goods........... Work in process.. Materials.............. ******************** 4,000 500 ….... Prepaid expenses....... 30,000 Property, plant, and equipment (net)....... Current liabilities..... 17,500 During 198, the retained earnings account increased 50% as a result of the year's business. No dividends were paid during the year. Balances of accounts receivable, prepaid expenses, current liabilities, and common stock were the same on December 31. 19B, as they had been on December 31, 19A. Inventories were reduced by exactly 50% except for the finished goods inventory, which was reduced by 33% %. Plant assets (net) were reduced by depreciation of $4,000, charged 4 to factory overhead and 14 to administrative expense. Sales of $60,000 were made on account, costing $38,000. Direct labor cost was $9,000. Factory overhead was applied at a rate of 100% of direct labor cost, leaving $2,000 underapplied that was closed into the cost of goods sold account. Total marketing and administrative expenses amounted to 10% and 15%, respectively, of the gross sales. Required: (1) Prepare a balance sheet as of December 31, 19B. (2) Prepare an income statement for the year 19B, with details of the cost of goods (AICPA adapted) manufactured and sold.
Company, with outstanding common stock of $30,000, had the following assets and 14. Balance sheet; Income statement. On December 31, 19A, Morrisville Canning liabilities: $ 5,000 10,000 Cash.. 6,000 2,000 Accounts receivable.. Finished goods........... Work in process.. Materials.............. ******************** 4,000 500 ….... Prepaid expenses....... 30,000 Property, plant, and equipment (net)....... Current liabilities..... 17,500 During 198, the retained earnings account increased 50% as a result of the year's business. No dividends were paid during the year. Balances of accounts receivable, prepaid expenses, current liabilities, and common stock were the same on December 31. 19B, as they had been on December 31, 19A. Inventories were reduced by exactly 50% except for the finished goods inventory, which was reduced by 33% %. Plant assets (net) were reduced by depreciation of $4,000, charged 4 to factory overhead and 14 to administrative expense. Sales of $60,000 were made on account, costing $38,000. Direct labor cost was $9,000. Factory overhead was applied at a rate of 100% of direct labor cost, leaving $2,000 underapplied that was closed into the cost of goods sold account. Total marketing and administrative expenses amounted to 10% and 15%, respectively, of the gross sales. Required: (1) Prepare a balance sheet as of December 31, 19B. (2) Prepare an income statement for the year 19B, with details of the cost of goods (AICPA adapted) manufactured and sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Company, with outstanding common stock of $30,000, had the following assets and
14. Balance sheet; Income statement. On December 31, 19A, Morrisville Canning
liabilities:
$ 5,000
10,000
6,000
2,000
Cash.......
Accounts receivable.
Finished goods....
Work in process...
Materials.
4,000
500
Prepaid expenses......
30,000
17,500
Property, plant, and equipment (net)........
Current liabilities......
During 198, the retained earnings account increased 50% as a result of the year's
business. No dividends were paid during the year. Balances of accounts receivable,
prepaid expenses, current liabilities, and common stock were the same on December 31.
198, as they had been on December 31, 19A. Inventories were reduced by exactly 50%
except for the finished goods inventory, which was reduced by 33%. Plant assets (net)
were reduced by depreciation of $4,000, charged 4 to factory overhead and 1/4 to
administrative expense. Sales of $60,000 were made on account, costing $38,000. Direct
labor cost was $9,000. Factory overhead was applied at a rate of 100% of direct labor cost,
leaving $2,000 underapplied that was closed into the cost of goods sold account. Total
marketing and administrative expenses amounted to 10% and 15%, respectively, of the
gross sales.
Required:
(1) Prepare a balance sheet as of December 31, 19B.
(2) Prepare an income statement for the year 19B, with details of the cost of goods
(AICPA adapted)
manufactured and sold.
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