Question

1. Tim Lumber buys $350,000 more inventory, pays $150,000 cash now, balance due to suppliers next month. Pays cash in Mo. 11 against Accts Payable starting balance owed from Mo-10 Accts Payable.

2. Tim Lumber sells $475,000 of inventory to customers for $725,000 net. $450,000 were cash sales, balance of sales on credit due from customers in 30 days in next month’s accounting period.

3. $140,000 cash is collected in the current Month-11 period on Accts Receivable carried over from Mo.10

4. Building monthly rent paid cash in current period is $10,000 monthly going forward

5. Wage expense = $45,000, $30,000 cash, balance paid next period. Mo-10 Wage Payable is paid cash now.

6. $50,000 is repaid on the Bank loan. Mo. loan interest expense = $1,000, paid cash in current period.

7. Tim Lumber buys extra $200,000 inventory, pays $50,000 cash, balance on Supplier credit, due in Mo. 12

8. Office supplies and utilities expense together totaled $30,000, paid cash in the current period

9. Depreciation expense is $750 per month ($72,000 div. by 8 = $9,000 annual div. by 12 = $750 mo.)

10. Amortized monthly insurance policies expense of $300 recorded in the current period

11. Another $75,000 is received in Mo.11 from accts rec. owed by customers who bought on credit in month 11.

12. Dividends = $10,000 paid cash to Owner in Mo.11 Month-11 Retained Earns = Mo. 11 N.Inc - $10,000 Div

13. Tim Lumber owes $43,950 income tax on Mo.11 pre-tax profits, pays period 12. Tim Lumber pays Mo-10 Tax payable

PREPARE THE 11 PERIOD INCOME STATEMENT & ENDING BALANCE SHEET

WAGES PAYABLE 8 282.7 155 443 SUPPLIER PAYABLE CASH ACCT RECEIVABLE INVENTORY Prepaid Curr. Asset TOT CURR. ASSETS 220 LOC BANK LOAN 135 30 TAX. Oth PAYABLE .6 881.3 393 0 LT ASSETS Office Eq CURR. LIABILITIES LONG TERM DEBT TOTAL LIABILITIES 64.5 393 TOTAL ASSETS 945.8 OWNERS EQUITY RETAINED EARNS TOTAL EQUITY 200 352.8 552.8 945.8 TOT LIABS & EQUITY

Answer 1

	Inventory
Particulars	amount	Particulars	amount
Beg balace	443	COGS	475
Cash	150	Balance	518
Accounts payable	200
cash	50
Accounts payable	150
	993		993
	Accounts payable
Particulars	amount	Particulars	amount
Cash	220	Beg balace	220
Balance	350	Inventory	200
		inventory	150
	570		570
	Sales
Particulars	amount	Particulars	amount
income statement	725	cash	450
		account receivable	275
	725		725
	Accounts receivable
Particulars	amount	Particulars	amount
Beg balance	155	cash	140
sales	275	cash	75
		Balance	215
	430		430
	Bank loan
Particulars	amount	Particulars	amount
Cash	50	Beg balance	135
balance	85
	135		135
	Interest expense
Particulars	amount	Particulars	amount
Cash	1	income statement	1
	1		1
	Office supplies and utilities expense
Particulars	amount	Particulars	amount
Cash	30	income statement	30
	30		30
	Depreciation expense
Particulars	amount	Particulars	amount
office equipment	0.75	income statement	0.75
	0.75		0.75
	Equipments
Particulars	amount	Particulars	amount
Beg balance	64.5	Depreciation	0.75
		balance	63.75
	64.5	64.5
	Insurance expense
Particulars	amount	Particulars	amount
Accrued expense	0.3	income statement	0.3
	0.3		0.3
	Prepaid expense
Particulars	amount	Particulars	amount
Beg balance	0.6	Insurance	0.3
		balance	0.3
	0.6		0.6

	Cash
Particulars	amount	Particulars	amount
Beg balace	282.7	Inventory	150
sales	450	Acc payable	220
accounts receivable	140	Rent	10
accounts receivable	75	wages	30
		wages payable	8
		Bank loan	50
		interest	1
		inventory	50
		office supplies and utility expense	30
		Dividend	10
		Cash	30
		Balance	358.7
	947.7		947.7
	Rent
Particulars	amount	Particulars	amount
cash	10	income statement	10
	10		10
	Wages
Particulars	amount	Particulars	amount
Cash	30	income statement	45
wages payable	15
	45		45
	Wages payable
Particulars	amount	Particulars	amount
Cash	8	beg balance	8
Balance	15	wages expense	15
	23		23
	Retained earnings
Particulars	amount	Particulars	amount
dividend	10	Beg balance	352.8
Balance	461.8	Profit for the year	119
	471.8		471.8
	Income tax expense
Particulars	amount	Particulars	amount
incometax expense	43.95	income statement	43.95
	43.95		43.95
	Income tax payable
Particulars	amount	Particulars	amount
cash	30	Beg balance	30
balance	43.95	income tax	43.95
	73.95		73.95

Income statement
Sales	725
COGS	475
Gross margin	250
Operating expense
Rent	10
depreciation	0.75
office supplies and utilities	30
wages	45
Insurance	0.3
Total expenses	86.05
Operating profit	163.95
Interest expense	1
Profit before taxes	162.95
Income tax expense	43.95
Net income	119

Balance sheet
Assets
Cash	358.7
Inventory	518
Accounts receivable	215
prepaid current assets	0.3
total current assets	1092
LT assets office equipment	63.75
Total assets	1155.75
Liabilities
wages payable	15
accounts payable	350
Bank loan	85
tax payable	43.95
total current liabilities	493.95
owners' equity	200
reatined earnings	461.8
total equity	661.8
Total equity+liabilities	1155.75