P 27-6A_ Herrera Company_ Work sheet, adjusting entries, and financial statements

P 27-6A      Net income $104,845

Work sheet, adjusting entries, and financial statements Herrera Company had the following trial balance columns on its work sheet.     

Herrera Company

Trail Balance

December 31, 20—

                              Account Title                                    Debit Balance                   Credit Balance

Cash-----------------------------------------------------------30,300.00---------------------------------------

Government Notes------------------------------------------5,000.00--------------------------------------

Interest Receivable--------------------------------------------------------------------------------------------

Accounts Receivable--------------------------------------34,000.00----------------------------------------

Allowance for Bad Debts-------------------------------------------------------------------530.00---------

Finished Goods Inventory--------------------------------24,000.00--------------------------------------

Work in Process Inventory---------------------------------9,000.00--------------------------------------

Materials Inventory------------------------------------------8,500.00--------------------------------------

Office-Supplies------------------------------------------------3,100.00--------------------------------------

Factory Supplies-----------------------------------------------3,800.00----------------------------------------

Land-----------------------------------------------------------100,000.00---------------------------------------

Factory Building---------------------------------------------120,000.00--------------------------------------

Accumulated Depreciation—Factory Building-----------------------------------            10,000.00

Factory Equipment-------------------------------------------40,000.00------------------------------------------

Accumulated Depreciation—Factory Equipment-----------------------------------------5,000.00

Interest Payable-----------------------------------------------------------------------------------------------------

Accounts Payable---------------------------------------------------------------------------------13,800.00

Income Tax Payable-----------------------------------------------------------------------------------------------

Bonds Payable--------------------------------------------------------------------------------------80,000.00

Capital Stock----------------------------------------------------------------------------------------50,000.00

Paid-In Capital in Excess of Par-----------------------------------------------------------------30,000.00

Retained Earnings----------------------------------------------------------------------------------92,400.00

Cash Dividends----------------------------------------------30,000.00---------------------------------------

Sales----------------------------------------------------------------------------------------------405,100.00---

Interest Revenue-----------------------------------------------------------------------------------300.00—

Cost of Goods Sold-----------------------------------------190,700.00-------------------------------------------------

Wages Expense-----------------------------------------------70,000.00---------------------------------------------------

Office Supplies Expense-------------------------------------------------------------------------------------------------------

Bad Debit Expense----------------------------------------------------------------------------------------------------------------

Utilities Expense---Office------------------------------------4,400.00-------------------------------------------------------

Interest Expense-----------------------------------------------7,000.00------------------------------------------------------

Income Tax Expense---------------------------------------18,000.00---------------------------------------------------------

 -------------------------------------------------------------------776,430.00---------------------776,430.00------------------

Data for adjusting the accounts are as follows:

a.       Factory overhead to be applied to work in process ending inventory                      $3,100

b.      Interest receivable                                                                                                                   $75

c.       Interest payable                                                                                                                               600

d.      Estimate of uncollectible accounts based on an aging of accounts receivable      2,930

e.      Office supplies consumed                         2,900

f.        Factory supplies consumed                         3,300

g.       Factory building depreciation                     5,000

h.      Factory equipment depreciation               4,000

i.         Over applied factory                                       1,470

j.        Provision for corporate income taxes     6,100

k.       Physical counts of the inventories agreed with the amounts in the books.            

Additional information needed to prepare the financial statements is as follows:

Beginning inventories:

        Finished goods January 1                 $18,000

        Work in process, January 1                 7,300

        Materials inventory, January 1           9,500

        Materials purchases for the year    51,500

        Direct labor                                              60,000

        Actual factory overhead                  90,930

        Indirect materials charged to production         3,400

Required:

1.       Prepare a work sheet

2.       Prepare the following financial statements and schedule:

a.       Income statement

b.      Schedule of cost of goods manufactured

c.       Retained earnings statement

d.      Balance sheet