Answer:
Morrison Company
1. Ending balance in the balance sheet:
Cash $168,340
Raw materials $4,900
Work in process $9,250
Finished goods $21,200
Prepaid expenses 850
Property, plant, and equipment (net) $49,000
Total assets $253,540
Liabilities and Stockholders' Equity
Accounts payable $77,750
Retained Earnings 175,790
Total Liabilities + Equity $253,540
2. Net Operating income for the month of January is: $4,490
Step-by-step explanation:
a) Data and Calculations:
Morrison Company
Balance Sheet
January 1 Assets
Cash $42,000
Raw materials $13,600
Work in process 7,450
Finished goods 18,000 39,050
Prepaid expenses 2,150
Property, plant, and equipment (net) 105,000
Total assets $188,200
Liabilities and Stockholders' Equity
Accounts payable $16,900
Retained earnings 171,300
Total liabilities and stockholders' equity $188,200
Transactions:
a. Purchased raw materials on account, $76,200.
b. Raw materials used in production, $84,900 ($68,000 was direct materials and $16,900 was indirect materials).
c. Paid $189,450 of salaries and wages in cash ($97,200 was direct labor $43,200 was indirect labor, and $49,050 was related to employees responsible for selling and administration).
d. Various manufacturing overhead costs incurred (on account) to support production $46,650.
e. Depreciation recorded on property, plant, and equipment, $56,000 (70% related to manufacturing equipment and 30% related to assets that support selling and administrative.
f. Various selling expenses paid in cash $39,050.
g. Prepaid insurance expired during the month, $1,300 (80% related to production, and 20% related to selling and administration).
h. Manufacturing overhead applied to production, $140,400.
i. Cost of goods manufactured, $303,800.
j. Cash sales to customers, $416,840.
k. Cost of goods sold (unadjusted), $300,600.
l. Cash payments to creditors, $62,000.
m. Underapplied or overapplied overhead|$__$6,590___
Cash
Account Title DR. CR.
Balance $42,000
Salaries $189,450
Selling expense 39,050
Sales $416,840
Suppliers $62,000
Bal. $168,340
Raw materials
Account Title DR. CR.
Balance. $13,600
Accounts Payable$76,200
Work in Process $84,900
Bal. $4,900
Work in process
Account Title DR. CR.
Balance 7,450
Raw Materials $68,000
Salaries $97,200
Overhead $140,400
Finished Goods $303,800
Bal. $9,250
Finished goods
Account Title DR. CR.
Balance 18,000
Work in Process $303,800
Cost of Goods Sold $300,600
Bal. $21,200
Cost of goods sold (adjusted)
Account Title DR. CR.
Finished Goods $300,600
Underapplied $6,590
Income Statement $307,190
Prepaid expenses
Account Title DR. CR.
Balance $2,150
Insurance Expense $1,300
Balance 850
Manufacturing overhead
Account Title DR. CR.
Raw materials $16,900
Salaries $43,200
Depreciation $39,200
Miscellaneous $46,650
Insurance $1,040
Work in Process $140,400
Bal. (underapplied) $6,590
Selling Expense
Account Title DR. CR.
Salaries 49,050
Others $39,050
Insurance 260
Depreciation $16,800
Income Summary $105,400
Property, plant, and equipment (net) 105,000
Depreciation for the year - $56,000
Balance = $49,000
Accounts payable
Account Title DR. CR.
Balance $16,900
Raw materials $76,200
Overhead $46,650
Cash $62,000
Balance $77,750
Income Statement and Statement of Retained Earnings:
Sales Revenue $416,840
Cost of goods sold 307,190
Gross profit $109,650
Salaries 49,050
Selling 39,050
Insurance 260
Depreciation 16,800 $105,160
Net Income $4,490
Retained earnings 171,300
Retained earnings $175,790