Manufacturing Corporation

A list of accounts for Manufacturing Corporation are provided below. 

Accounts Jan 1, 199X Dec 31, 199X
Cash $37,000 $107,000
Accounts Receivable $165,000 $140,000
Accounts Payable $70,000 $66,000
Raw Materials Inventory $42,000 $46,000
Work in Process Inventory $50,000 $130,000
Finished Goods Inventory $160,000 $150,000
Factory Building $550,000 $550,000
Accumulated Depreciation-Building $110,000 $125,000
Factory Equipment $325,000 $325,000
Accumulated Depreciation-Equipment $75,000 $85,000
Sales Commissions Payable $10,000 $7,000
Patent $350,000 $350,000
Patent Amortization $50,000 $75,000
Prepaid Insurance $17,000 $8,500
Wages Payable (factory) $6,000 $5,000
Taxes Payable $0 $31,675
Salaries Payable (Administrative) $6,000 $8,000
Note Payable $184,000 $180,000
Capital Stock $600,000 $600,000
Retained Earnings $235,000 $293,825
Mortgage Payable $350,000 $330,000

The following information is provided about the transactions that occurred during the period.

  1. Factory Utility Expense incurred was $20,000
  2. Administrative Office Rent was $34,000
  3. Administrative Office Utilities Expense was  $15,000
  4. Payments on Accounts Payable were $175,000
  5. Sales Commissions paid were $40,000
  6. Administrative Salaries paid were  $30,000
  7. On December 31, of the prior year a  two year insurance policy was purchased on the factory building and equipment for $17,000
  8. The cost of maintaining the factory building and equipment for the period was $40,000
  9. Collections on Accounts Receivable were $300,000.
  10. Cash sales were $200,000.
  11. Wages paid to Factory workers was $40,000.
  12. Interest paid during the period was $12,000.

Assume that Manufacturing's tax rate is 35%.

Required:

  1. Create a trial balance on January 1, 199X
  2. Create a trial balance prior to closing the temporary accounts to income summary.
  3. Create an income statement for the period.

Solution

Accounting Fun

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