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Prepare Income Statements and Work Sheets

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.

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