This assignment is a continuation of assignment 1.  He bought the building for $150,000 total and has divided in into land of $50,000 and the building at $100,000. The building is on a 20 year depreciation schedule, and the production equipment has a 7 year depreciation schedule. You need to use the other information from that assignment to complete this one. He only sells what he makes – no finished inventory. His is a sole proprietor business, so the business itself does not pay any corporate taxes.

1. Using the following information, construct a table showing three income statements for the periods April 1 – June 30, July 1 – September 30, and October 1 – December 31, year 1.
2. Using the following information, construct three more balance sheets for the same periods using the one from April 1 as a starting balance sheet.

April 1 – June 30

Sales:  $100,000 ($75,000 cash, $25,000 accounts receivables)

Purchases:

Inventory: $27,000 (Assume he exactly replenishes his inventory as he uses it.)

Truck: $35,000 cash on April 2.  5 year depreciation schedule.

July 1 – September 30

Sales:  $120,000 ($90,000 cash, $30,000 accounts receivables).  Received $20,000 from prior period account’s receivables.

Purchases: Inventory: $32,000

October 1- December 31

Sales:  $150,000 ($120,000 cash, $30,000 accounts receivables).  Received $5000 from April- June period accounts receivables and $10,000 from July – September accounts receivables.

Purchases: $50,000 in inventory

Monthly Expenses for all months:

Total manufacturing wages including social security and Medicare tax: $8,000.

Total administrative salaries and wages including social security and Medicare tax: $5000

Utilities: $450

Insurance: $2000

Advertising: $1200

Legal and accounting: $500

Miscellaneous: $500

P(5.u)            

Prime Essay Services , written from scratch, delivered on time, at affordable rates!