1.

Prepaid Insurance
Beginning balance 15,000 Ending balance 17,000 A
Payment 8,000 Expense 6,000
23,000 23,000

2. Unearned Rent
Ending balance 6,000 Beginning balance 4,000
Revenues 45,000 Collection 47,000 B
51,000 51,000

3. Interest Receivable
Beginning balance 16,000 Ending balance 5,000
Revenues 52,000 Collection 63,000 B
68,000 68,000

4. Salaries Payable
Ending balance 38,000 Beginning balance 17,000
Payment 155,000 Expense 176,000 D
193,000 193,000
1. Accounts receivable
Beginning balance 9,000 Ending balance 15,000
Revenues 134,000 Collection 125,000

Unearned service revenue

Ending balance 4,000 Beginning balance 7,000

147,000 147,000

2. Prepaid expenses
Beginning balance 5,000 Ending balance 12,000
Payment 62,000 Expenses 54,000

Accrued expenses
Ending balance 2,000 Beginning balance 3,000

69,000 69,000

3. Cash basis Accrual basis

Revenues 125,000 134,000
Expenses 62,000 54,000
Net income 63,000 80,000
 Raw materials inventory
Beginning balance 30,000 Ending balance
Net purchases 110,000 Issued to production
Total raw materials available for usage 140,000

Work-in-process inventory
Beginning balance 100,000 Ending balance
Direct materials used 80,000 Cost of goods manufactured
Direct labor 80,000
Factory ovehead 36,000
Total goods placed in process 296,000

Finished good inventory

Beginning balance 140,000 Ending balance
Cost of goods manufactured 182,500 Cost of sales
322,500

Sales 100.00% 300,000

Cost of sales 67.50% 202,500
Gross profit 32.50% 97,500

1. D
2. C
3. A
4. A
 Proforma journal entries:
60,000
80,000 Raw materials inventory 110,000
140,000 Accounts payable/Cash
To record purhase of raw materials

Work-in-process inventory 80,000

Raw materials
113,500 To record issuance of direct materials to production
182,500
Work-in-process inventory 80,000
Payroll/Salaries payable/Cash
296,000 To record direct labor incurred/paid.

Work-in-process inventory 36,000

Factory overhead
To record application of factory overhead
120,000
202,500 Finished goods inventory 182,500
322,500 Work-in-process inventory
To record transfer of completely manufactured goods.

Accounts receivable 300,000

Sales
To record sales

Costs of sales 202,500

Finished goods inventory
To record costs related to sales.
110,000

80,000

80,000

36,000

182,500

300,000

202,500
1. Accounts receivable
Beginning balance 124,000 Ending balance
Sales on account 1,369,500 Sales returns and allowances
Sales discounts
Collection
Write-off of bad debts
1,493,500

Advances from customers

Ending balance 5,500 Beginning balance
Sales on account 10,500 Collection
16,000

Total sales 1,380,000 B

2. Accounts payable
Ending balance 86,790 Beginning balance
Purchase returns and allowances 18,000 Gross purchases
Purchase discounts 11,500
Payment 820,500
936,790

3. Merchandise inventory
Beginning balance 230,000 Ending balance
Net purchases 734,290 Cost of sales
964,290

4. Cost of equipment 50,000

Accumulated depreciation (10,000)
Book value 40,000

Proceeds from sale 45,000

Book value (40,000)
Gain from sale 5,000 C

5. Unexpired insurance
Beginning balance 3,500 Ending balance
Payment 8,250 Expense
 11,750

6. Salaries payable
Ending balance 15,950 Beginning balance
Payment 430,700 Expense
446,650

7. Utilities payable
Ending balance 9,650 Beginning balance
Payment 18,500 Expense
28,150

8. Total sales 1,380,000

Estimate 1.20%
Bad debts expens 16,560 B

9. Net sales 1,345,400

Cost of sales (719,290)
Gross income 626,110
Gain from sale 5,000
Insurance expense (9,750)
Salaries expense (440,650)
Utilities expense (22,650)
Depreciation expense (21,500)
Bad debts expense (16,560)
Net income 120,000

10. Dividends
P0.75 X 3 declarations X 100,000 shares 225,000 D

11. Allowance for bad debts

Ending balance 10,060 Beginning balance
Write-off 6,500 Expense
16,560
 187,000
19,400
15,200
1,265,400
6,500
1,493,500

9,000
7,000
16,000

173,000
763,790 D

936,790

245,000
719,290 A
964,290

2,000
9,750 D
11,750

6,000
440,650 C
446,650

5,500
22,650 D
28,150

-
16,560
16,560