CASH ACCOUNTS PAYABLE

+ - - +
118,440 144,000 788,400 185,760
264,000 78,000 825,000
2,604,000 492,000 66,000
198,000 788,400 1,076,760
49,200 288,360
135,600
522,000 NOTES PAYABLE
38,400 - +
788,400 288,840
9,000 264,000
36,000 552,840
2,986,440 2,490,600
495,840 INTEREST ON LOANS
- +
ACCOUNTS RECEIVABLE 38,400
+ -
311,760 19,200 SALES
2,562,000 49,200
2,604,000 2,562,000
2,873,760 2,672,400
201,360 COST OF GOODS SOLD

SALES RETURNS & ALLOWANCES 1,806,624

+ -
19,200 INCOME TAXES PAYABLE

SALES DISCOUNTS 9,000 9,000

+ - 58,000
49,200 9,000 67,000
58,000
SELLING & ADMIN EXPENSES
+ - RETAINED EARNINGS
522,000
36,000 829,560
FINISHED GOODS INVENTORY 68,576
+ - 36,000 898,136
257,040 1,806,624 862,136
1,901,952
2,158,992 1,806,624 CAPITAL STOCK
352,368
1,512,000
WORK IN PROCESS INVENTORY
+ - MATERIALS
172,200 1,901,952 + -
811,000 110,520 811,000
1,129,200 825,000
 2,112,400 1,901,952 935,520 811,000
210,448 124,520

DIRECT MANUFACTURING LABOR SUPPLIES

+ - + -
492,000 17,280 61,200
66,000
INDIRECT MANUFACTURING LABOR 83,280 61,200
+ - 22,080
198,000
PLANT & EQUIPMENT
POWER, HEAT & LIGHT + -
+ - 2,678,400 907,200
135,600 144,000 140,400
2,822,400 1,047,600
SOCIAL SECURITY TAXES 1,744,800
+ -
49,200 DEPRECIATION EXPENSE
- +
PREPAID TAXES & INSURANCE 140,400
+ -
66,720 52,800
78,000
144,720 52,800
91,920
1) 2,562,000 debit into A/R then credit in Sales
19,200 debit in Sales Returns & Allowances and credit in A/R
49200 debit in Sales Discounts and credit in A/R

2a) 144,000 credit in Cash and debit in Plant & Equipment

78,000 debit in prepaid taxes and insurance and credit in cash
825,000 debit in Materials and credit in A/P
66000 debit in supplies and credit in A/P

2b) 492,000 debit in direct manufacturing labor and credit in cash

198,000 debit in indirect manufacturing labor and credit in cash
49,200 debit in social security taxes and credit in cash
135,600 debit in power, heat and light and credit in cash

2c) 522,000 debit in selling and admin expenses and credit in cash

3) 140,400 debit in depreciation expense and credit in plant & equipment

52,800 credit in prepaid taxes and insurance
61,200 credit in supplies
811,000 debit in Work in Process Inventory and credit in Materials

4)1,901,952 credit in WIP Inventory and debit on Finished Goods Inventory

5) 1,806,624 debit in COGS and credit in Finished Goods

6a) 264,000 debit in cash and credit in N/P

6b) 38,400 debit in interest on loans and credit on cash

7) 2,604,000 debit in cash and credit from A/R

8) 788,400 debit in A/P and credit in cash

9000 debit in Income Taxes Payable and credit in Cash

9) 58000 credit in income taxes payable

10) 36000 debit in retained earnings and credit in cash

 Browning Manufacturing Company
Projected 2010 Statement of Cost of Goods Sold

Finished Goods Inventory (Jan. 1, 2010) 257,040

Work in Process Inventory (Jan. 1, 2010) 172,200
Materials Inventory (Jan. 1, 2010) 811,000
Plus: Factory Expenses:
Direct Manufacturing Labor 492,000
Factory Overhead:
Indirect Manufacturing Labor 198,000
Power, Heat & Light 135,600
Plant Depreciation 140,400
Social Security Taxes 49,200
Taxes and Insurance 52,800
Factory Supplies 61,200 637,200
2,112,400
Less: Work in Process Inventory 210,448
Cost of Goods Manufactured 1,901,952
2,158,992
Less: Finished Goods Inventory 352,368
Cost of Goods Sold 1,806,624
 Browning Manufacturing Company
Projected 2010 Income Statement

Sales 2,562,000
Less: Sales Returns and Allowances 19,200
Sales Discounts Allowed 49,200 68,400
Net Sales 2,493,600
Less: Cost of Goods Sold 1,806,624
Gross Margin 686,976
Less: Selling and Administrative Expenses 522,000
Operating Income 164,976
Less: Interest Expense 38,400
Income Before Taxes 125,576
Less: Taxes 58,000
Net Income 68,576
 Browning Manufacturing Company
Projected 2010 Balance Sheet

Assets
Current Assets:
Cash and Marketable Securities 495,840
Accounts Receivable 201,360
Inventories:
Materials 124,520
Work in Process 210,448
Finished Goods 352,368
Supplies 22,080 709,416
Prepaid Taxes and Insurance 91,920
Total Current Assets 1,498,536
Other Assets:
Manufacturing Plant at Cost 2,822,400
Less: Accumulated Depreciation 1,047,600 1,774,800
Total Assets 3,273,336

Liabilities and Shareholder's Equity

Current Liabilities:
Accounts Payable 288,360
Notes Payable 552,840
Income Taxes Payable 58,000
Total Current Liabilities 899,200
Shareholder's Equity:
Capital Stock 1,512,000
Retained Earnings 862,136
Total Liabilities and Shareholder's Equity 3,273,336
 Income Statement Comparison
Account Name Year 2009 Year 2010 % Difference Remarks
Sales 2,295,600 2,562,000 12% Increase
Sales Returns and Allowances 17,640 19,200 9% Increase
Sales Discounts Allowed 43,920 49,200 12% Increase
Cost of Goods Sold 1,568,280 1,806,624 15% Increase
Selling and Administrative Expense 437,160 522,000 19% Increase
Interest Expense 34,080 38,400 13% Increase
Income Tax Expense 89,520 58,000 -35% Decrease

Balance Sheet Comparison

Account Name Year 2009 Year 2010 % Difference Remarks
Cash and Marketable Securities 118,440 443,640 275% Increase
Accounts Receivable 311,760 201,360 -35% Decrease
Materials 110,520 124,520 13% Increase
Work in Process 172,200 210,448 22% Increase
Finished Goods 257,040 352,368 37% Increase
Supplies 17,280 22,080 28% Increase
Prepaid Taxes and Insurance 66,720 91,920 28% Increase
Manufacturing Plant at Cost 2,678,400 2,822,400 5% Increase
Accounts Payable 185,760 288,360 55% Increase
Notes Payable 288,840 552,840 91% Increase
Income Taxes Payable 9,000 5,800 -36% Decrease
Capital Stock 1,512,000 1,512,000 0%
Retained Earnings 829,560 862,136 4% Increase
Gross Profit 665,760 686,976 2% Increase