Patrick Lyell Manufacturing started the year with the following balances: Accoun
ID: 2781454 • Letter: P
Question
Patrick Lyell Manufacturing started the year with the following balances: Account title Balance as 0 January 1, S Cash Inventory Manufacturing equipment Accounts payable Net worth 100,000 100,000 400,000 50,000 550,000 Transactions during the year were limited to the following ones: paid $100,000 for labor; purchased $150,000 worth of materials; noted equipment depreciation of $50,000, adding to inventory 300,000 units costing $1 to the manufacturer, sold 300,000 units for $2 each, cash; and purchased new equipment costing $200,000. Make an end-of-year income statement and balance sheet as of December 31. (Hints: Neglect income taxes. Accounts payable and inventory at the end of year were the same as at the beginning of the year. For instance, the balance sheet for the cash account, per $1000, is 100-100-150 + 600-200 = $250.)Explanation / Answer
Income statement Sales revenue [300000*2] 600,000 less:cost of sales [300,000*1] 300,000 Gross margin 300,000 Balancesheet Asset current asset Cash 100000beginning-100000labor-150000material+600000sales-200000equipment 250000 Inventory 100000 Total current asset 350000 Non current asset Manufacturing equipment 400000+200000-50000depreciation 550000 Total asset 900000 Liabilities and equity Liability-Accounts payable 50000 Net worth 550000+300000net income 850000 Total liabiltiies and equity 900000