Problem 2-8: Statement of Cost of Goods Sold; Income Statement; Balance Sh

On September 30, 20XB the trial balance of The Kearney Company appeared a

THE KEARNEY COMPANY

TRIAL BALANCE
September 30, 20XB

Cash in Banks and on Hand ... $ 234,000

Notes Receivable ..... 21,800
Accounts Receivable ...... 444,000
Raw Materials Inventory, October 1, 20XA 282,000
Work in Process Inventory, October 1, 20XA .... 345,000
Finished Goods Inventory, October 1, 20XA 500,000
Prepaid Expenses ...... 35,500
Land ........ 150,000
Buildings . ......1,250,000
Accumulated Depreciation - Buildings ............... $ -150,000
Machinery .....1,650,000
Accumulated Depreciation - Machinery .... -660,000
Office Furniture and Fixtures ...... 26,000
Accumulated Depreciation - Office Furniture and Fixtures ............ -5,000
Notes Payable ....... -500,000
Accounts Payable ......... -100,000
Accrued Wages Payable ....... -50,000
Accrued Interest on Mortgage ....... -5,000
Mortgage on Plant ....... -750,000
Capital Stock ..... ###
Earnings Retained in Business ..... ###

Sales ...... ###

Sales Allowances ..... 60,000
Raw Materials Purchased 500,000
Direct Labor ...1,000,000
Patterns and Drawings Expenses ..... 35,000
Miscellaneous Factory Overhead ....... 900,000
Freight and Postage on Sales 10,000
Miscellaneous Marketing Expenses ... 350,000
Miscellaneous Administrative Expenses ... 250,000
Interest Earned ......... -25,000
Interest Paid ... 60,000
Discount on Sales .... 50,000
Totals ..$ 8,153,300 $ ###
 The following information is also available:

Inventories on September 30, 20XB: Allowances for depreciation: 1380000

Raw materials, $ 280,000 3 % on buildings (80 % to fa 1,127,000
Work in process, $ 380,000 10 % on machinery 253,000
Finished goods, $ 720,000 5 % on office furniture and fixt

Required: (1) A cost of goods sold statement for the year ended September 30, 20XB.
(2) An income statement for the year ended September 30, 2
(3) A balance sheet as of September 30, 20XB.
(4) The following ratios and percentages:
(a) Current ratio.
(b) Acid-test ratio.
(c) Net income to sales percentage.
(d) Ratio of gross profit to sales.
(e) Rate of return on capital employed.

THE KEARNEY COMPANY

Cost of Good Sold Statement
September 30, 20XB
Revenue:

Gross Sales $ 3,600,000

Less: Sales Allowances $ 50,000

Raw Materials Purchased 10,000

Discount on Sales 60,000 120,000

Net Sales $ 3,720,000

Raw Materials Purchased 500,000

Direct Labor 1,000,000

Patterns and Drawings Expenses 35,000

Miscellaneous Factory Overhead 900,000

Interest Earned ......... 25,000

Interest Paid ...... 60,000

Miscellaneous Marketing Expenses ........ 350,000

Miscellaneous Administrative Expenses ..... 250,000

 THE KEARNEY COMPANY
Financial Statement
September 30, 20XB

ASSETS LIABILITIES DAN EQUITY

Current Assets : Current Liabilities :
Cash in Banks and on Hand $ 234,000 Notes Payable $
Notes Receivable 21,800 Accounts Payable
Accounts Receivable 444,000 Accrued Wages Payable
Raw Materials Inventory, October 1, 20XA 282,000 Total Current Liabilities :
Work in Process Inventory, October 1, 20XA 345,000
Finished Goods Inventory, October 1, 20XA 500,000 Non Current Liabilities :
Prepaid Expenses 35,500 Accrued Interest on Mortgage
Total Current Assets ### Mortgage on Plant
Total Non Current Liabilities :
Non Current Assets :
Land 150,000 Equity :
Buildings 1,250,000 Capital Stock
Accumulated Depreciation - Buildings -150,000 Earnings Retained in Business
Machinery 1,650,000 Current Earnings
Accumulated Depreciation - Machinery -660,000 Total Equity
Office Furniture and Fixtures 26,000
Accumulated Depreciation - Office Furniture and Fixtu -5,000
Total Non Current Assets ###

TOTAL ### TOTAL

HE KEARNEY COMPANY
Financial Statement
September 30, 20XB

LIABILITIES DAN EQUITY

500,000
100,000
50,000

650,000

5,000
750,000

755,000

1,000,000
1,308,300

410,000
###

###
 THE KEARNEY COMPANY
BALANCE sheet
September 30, 20XB

Current assets:
C $ 234,000
Marketable securities
Accounts receivable (net)
Inventories (materials, work in process, finishe
Prepaid insurances, taxes and mescellaneous
Total current assets

THE KEARNEY COMPANY

Financial Statement
September 30, 20XB
ASSETS LIABILITIES DAN EQUITY
Current Assets : Current Liabilities :
Cash in Banks and on Hand $ 234,000 Notes Payable
Notes Receivable 21,800 Accounts Payable
Accounts Receivable 444,000 Accrued Wages Payable
Raw Materials Inventory, October 1, 20XA 282,000 Total Current Liabilities :
Work in Process Inventory, October 1, 20XA 345,000
Finished Goods Inventory, October 1, 20XA 500,000 Non Current Liabilities :
Prepaid Expenses 35,500 Accrued Interest on Mortgage
Total Current Assets 1,862,300 Mortgage on Plant
Total Non Current Liabilities :
Non Current Assets :
Land 150,000 Equity :
Buildings 1,250,000 Capital Stock
Accumulated Depreciation - Buildings -150,000 Earnings Retained in Business
Machinery 1,650,000 Current Earnings
Accumulated Depreciation - Machinery -660,000 Total Equity
Office Furniture and Fixtures 26,000
Accumulated Depreciation - Office Furniture and Fixt -5,000
Total Non Current Assets 2,261,000

TOTAL 4,123,300 TOTAL

MPANY

ceivable (net)
materials, work in process, finished goods)
rances, taxes and mescellaneous expenses
ent assets

COMPANY
atement
0, 20XB
LIABILITIES DAN EQUITY
Current Liabilities :
Notes Payable $ 500,000
Accounts Payable 100,000
Accrued Wages Payable 50,000
Total Current Liabilities : 650,000

Non Current Liabilities :

Accrued Interest on Mortgage 5,000
Mortgage on Plant 750,000
Total Non Current Liabilities : 755,000

Capital Stock 1,000,000

Earnings Retained in Business 1,308,300
Current Earnings 410,000
Total Equity 2,718,300

4,123,300