Week 6 Problem
NOTE: It is expected that this problem will be completed using an Excel spreadsheet using formulas. Please see the Excel Tutorial that is available under the course home tab.
The Duncan Company has just completed a number of budgets for the coming year. The cost of goods manufactured schedule, the proforma income statement and the balance sheet still have to be completed. The following information is available:
Prior year Balance Sheet:
Cash $35,000 Accounts Payable $98,000
Accounts Receivable 45,000 Other Current Liabilities 39,000
Materials Inventory 35,000 Income Taxes Payable 21,000
WIP Inventory 25,000
Finished Goods Inventory 32,000 Long-Term Debt 250,000
Prepaid Expenses 15,000
Plant and Equipment 450,000 Common Stock 100,000
Accumulated Depreciation (120,000) Retained Earnings 27,000
Other Assets 18,000
Total Assets $535,000 Total Liab. & Equity $535,000
Information from recent budgets for the coming year:
1. Projected sales are $1,800,000 (12,690 units)
2. Projected direct material purchases are $500,000
3. Projected direct material usage is $495,000
4. Projected direct labor expense is $400,000
5. Projected overhead is $380,000
6. Projected selling expenses are $120,000
7. Projected administrative expenses are $300,000
8. Projected cash collections are $1,785,000
9. Projected payments for materials (accounts payable) are $520,000
10. Projected payments for other operating expenses (other current liabilities) are $1,130,000
11. Projected depreciation expense is $55,000 and is already included in mfg overhead
Additional information that is available:
1. The expected tax rate is 35%
2. The company is planning a stock issue of $25,000
3. Income taxes are paid 3 months after the year-end
4. The company anticipates purchasing a new patent for $10,000 during the year.
5. WIP inventory is expected to decrease by $2,000
6. Finished goods inventory is expected to increase by $8,000
7. Due to insurance rate increases, it is expected that prepaid expenses will increase by $3,000
1. A purchase of additional equipment for $75,000 is expected on January 1st.
2. The purchase will be made using $50,000 cash and long-term debt will be increased by $25,000
Long-Term Debt information:
1. All long-term debt will have an 8% annual rate.
2. A payment of $50,000 including BOTH principle and interest will be made on December 31st.
Required: Prepare a cost of goods manufactured schedule, a proforma income statement and proforma balance sheet.© BrainMass Inc. brainmass.com October 25, 2018, 1:29 am ad1c9bdddf
The solution explains how to prepare a cost of goods manufactured schedule, a proforma income statement and proforma balance sheet.
The Colo Company: Multiple-Step Income Statement, Statement of Owner's Equity and Classified Balance Sheet
The Colo Company
Assume it is Monday, May 1, the first business day of the month, and you have just been hired as the accountant for Colo Company, which operates with monthly accounting periods. All of the company's accounting work is completed through the end of April and its ledgers show April 30 balances.
During your first month on the job, the company experiences the following transactions and events (terms for all its credit sales are 2_10, n_30 unless stated differently):
May 1 Issued Check No. 3410 to S&P Management Co. in payment of the May rent, $3,710. (Use two lines to record the transaction. Charge 80% of the rent to Rent Expense?Selling Space and the balance to Rent Expense?Office Space.)
2 Sold merchandise on credit to Hensel Company, Invoice No. 8785, for $6,100 (cost is $4,100). 2 Issued a $175 credit memorandum to Knox, Inc., for defective (worthless) merchandise sold on April 28 and returned for credit. The total selling price (gross) was $4,725.
3 Received a $798 credit memorandum from Peyton Products for the return of merchandise purchased on April 29.
4 Purchased the following on credit from Gear Supply Co.: merchandise, $37,072; store supplies, $574; and office supplies, $83. Invoice dated May 4, terms n_10 EOM.
5 Received payment from Knox, Inc., for the balance from the April 28 sale less the May 2 return and the discount.
8 Issued Check No. 3411 to Peyton Products to pay for the $7,098 of merchandise purchase on April 29 less the May 3 return and a 2% discount.
9 Sold store supplies to the merchant next door at their cost of $350 cash.
10 Purchased $4,074 of office equipment on credit from Gear Supply Co., invoice dated May 10, terms n_10 EOM.
11 Received payment from Hensel Company for the May 2 sale less the discount.
11 Purchased $8,800 of merchandise from Garcia, Inc., invoice dated May 10, terms 2_10, n_30.
12 Received an $854 credit memorandum from Gear Supply Co. for the return of defective office equipment received on May 10.
15 Issued Check No. 3412, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cashed the check and paid the employees.
15 Cash sales for the first half of the month are $59,220 (cost is $38,200). (Cash sales are recorded daily but are recorded only twice here to reduce repetitive entries.)
15 Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. (Such items are posted daily but are posted only twice each month because they are few in number.)
16 Sold merchandise on credit to Hensel Company, Invoice No. 8786, for $3,990 (cost is $1,890).
17 Purchased $13,650 of merchandise from Fink Corp., invoice dated May 14, terms 2_10,n_60.
19 Issued Check No. 3413 to Garcia, Inc., in payment of its May 10 invoice less the discount.
22 Sold merchandise to Lee Services, Invoice No. 8787, for $6,850 (cost is $4,990), terms 2_10, n_60.
23 Issued Check No. 3414 to Fink Corp. in payment of its May 14 invoice less the discount.
24 Purchased the following on credit from Gear Supply Co.: merchandise, $8,120; store supplies, $630; and office supplies, $280. Invoice dated May 24, terms n_10 EOM.
25 Purchased $3,080 of merchandise from Peyton Products, invoice dated May 23, terms 2_10, n_30.
26 Sold merchandise on credit to Crane Corp., Invoice No. 8788, for $14,210 (cost is $8,230).
26 Issued Check No. 3415 to Perennial Power in payment of the May electric bill, $1,283.
29 The owner of Colo Company, Jenny Colo, used Check No. 3416 to withdraw $7,000 cash from the business for personal use.
30 Received payment from Lee Services for the May 22 sale less the discount.
30 Issued Check No. 3417, payable to Payroll, in payment of sales salaries, $5,320, and office salaries, $3,150. Cashed the check and paid the employees.
31 Cash sales for the last half of the month are $66,052 (cost is $42,500).
31 Post to the customer and creditor accounts. Also post individual items that are not included in column totals at the end of the month to the general ledger accounts. Foot and crossfoot the journals and make the month-end postings.
1. Enter these transactions in a sales journal, a purchases journal, a cash receipts journal, a cash disbursements journal, or a general journal as illustrated in this chapter. Post when instructed to do so. Assume a perpetual inventory system.
2. Prepare a trial balance in the Trial Balance columns of the work sheet form provided with the working papers. Complete the work sheet using the following information for accounting adjustments:
a. Expired insurance, $553.
b. Ending store supplies inventory, $2,632.
c. Ending office supplies inventory, $504.
d. Depreciation of store equipment, $567.
e. Depreciation of office equipment, $329.
Prepare and post adjusting and closing entries.
3. Prepare a May 2005 multiple-step income statement, a May 2005 statement of owner's equity, and a May 31, 2005, classified balance sheet.
4. Prepare a post-closing trial balance. Also prove the accuracy of subsidiary ledgers by preparing schedules of both accounts receivable and accounts payable.View Full Posting Details