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    Prepare Income Statements and Work Sheets

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    Base your answer to Problem 1 on the following information.

    1. The list of accounts below and the unadjusted balances of these accounts were taken
    from the ledger of the Manville Corporation at the end of their accounting period,
    March 31, 20X2:

    Cash $ 3,995
    Accounts Receivable 13,240
    Allowance for Doubtful Accounts 120
    Inventory—April 1, 20X1 22,800
    Prepaid Insurance 360
    Supplies on Hand 520
    Equipment 15,000
    Accumulated Depreciation—Equipment 4,500
    Accounts Payable 11,870
    Taxes Payable 390
    Capital Stock 25,000
    Retained Earnings 11,920
    Dividends 9,000
    Sales 89,490
    Sales Returns and Allowances 920
    Sales Discounts 1,330
    Purchases 56,320
    Purchase Returns and Allowances 490
    Purchase Discounts 1,125
    Transportation-In 880
    Sales Salaries 11,800
    Rent Expense 3,600
    Advertising Expense 2,700
    Utilities Expense 1,880
    Maintenance Expense 560

    Additional data:
    a. Merchandise inventory at March 31, 20X2, was $23,300.
    b. The Allowance for Doubtful Accounts should be increased by $600.
    c. Prepaid insurance represents a three-year policy purchased April 1, 20X1.
    d. Supplies on hand were estimated to be $170 on March 31, 20X2.
    e. The cost of the equipment is being depreciated over a 15-year estimated life using
    the straight-line method. Salvage value should be ignored.
    f. Unpaid sales salaries on March 31, 20X2, amounted to $200.

    REQUIRED: 1. Prepare a work sheet. (Adjusted trial balance columns may be omitted.)
    2. Prepare an income statement. 3. Prepare a statement of retained earnings. 4. Prepare a
    balance sheet. 5. Prepare the closing entries.

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    Solution Summary

    The expert prepares income statements for work sheets.