Morrison Company uses a job-order costing system to assign manufacturing costs to Jobs. Its balance sheet on January 1 is as follows:Morrison Company Balance Sheet January 1 Assets Cash $42,000Raw materials $13,600 Work in process 7,450 Finished goods 18,000 39,050Prepaid expenses 2,150Property, plant, and equipment (net) 105,000Total assets $188,200Liabilities and Stockholders' Equity Accounts payable $16,900Retained earnings 171,300Total liabilities and stockholders' equity $188,200During January the company completed the following transactions:a. Purchased raw materials on account, $76,200.b. Raw materials used in production, $84,900 ($68,000 was direct materials and $16,900 was indirect materials).c. Paid $189,450 of salaries and wages in cash ($97,200 was direct labor $43,200 was indirect labor, and $49,050 was related to employees responsible for selling and administration).d. Various manufacturing overhead costs incurred (on account) to support production $46,650.e. Depreciation recorded on property, plant, and equipment, $56,000 (70% related to manufacturing equipment and 30% related to assets that support selling and administrative. f. Various selling expenses paid in cash $39,050.g. Prepaid insurance expired during the month, $1,300 (80% related to production, and 20% related to selling and administration).h. Manufacturing overhead applied to production, $140,400.i. Cost of goods manufactured, $303,800.j. Cash sales t customers, $416,840.k. Cost of goods sold (unadjusted), $300,600.l. Cash payments to creditors, $62,000.m. Underapplied or overapplied overhead|$Required:1. Calculate the ending balance that would be reported on the company?s balance sheet on January 31.2. What is Marrison Company?s net operating income for the month of January?

Morrison Company

1.  Ending balance in the balance sheet:

Cash $168,340

Raw materials $4,900

Work in process $9,250

Finished goods $21,200

Prepaid expenses 850

Property, plant, and equipment (net) $49,000

Total assets $253,540

Liabilities and Stockholders' Equity

Accounts payable  $77,750

Retained Earnings 175,790

Total Liabilities + Equity $253,540

2. Net Operating income for the month of January is: $4,490

Explanation:

a) Data and Calculations:

Morrison Company

Balance Sheet

January 1 Assets

Cash $42,000

Raw materials  $13,600

Work in process  7,450

Finished goods  18,000  39,050

Prepaid expenses 2,150

Property, plant, and equipment (net) 105,000

Total assets $188,200

Liabilities and Stockholders' Equity

Accounts payable $16,900

Retained earnings 171,300

Total liabilities and stockholders' equity $188,200

Transactions:

a. Purchased raw materials on account, $76,200.

b. Raw materials used in production, $84,900 ($68,000 was direct materials and $16,900 was indirect materials).

c. Paid $189,450 of salaries and wages in cash ($97,200 was direct labor $43,200 was indirect labor, and $49,050 was related to employees responsible for selling and administration).

d. Various manufacturing overhead costs incurred (on account) to support production $46,650.

e. Depreciation recorded on property, plant, and equipment, $56,000 (70% related to manufacturing equipment and 30% related to assets that support selling and administrative.

f. Various selling expenses paid in cash $39,050.

g. Prepaid insurance expired during the month, $1,300 (80% related to production, and 20% related to selling and administration).

h. Manufacturing overhead applied to production, $140,400.

i. Cost of goods manufactured, $303,800.

j. Cash sales to customers, $416,840.

k. Cost of goods sold (unadjusted), $300,600.

l. Cash payments to creditors, $62,000.

m. Underapplied or overapplied overhead|$__$6,590___

Cash

Account Title   DR.            CR.

Balance      $42,000

Salaries                      $189,450

Selling expense            39,050

Sales         $416,840

Suppliers                   $62,000

Bal.                            $168,340

Raw materials

Account Title            DR.            CR.

Balance.                $13,600

Accounts Payable$76,200

Work in Process                   $84,900

Bal.                                          $4,900

Work in process

Account Title          DR.            CR.

Balance                7,450

Raw Materials $68,000

Salaries           $97,200

Overhead      $140,400

Finished Goods                  $303,800

Bal.                                          $9,250

Finished goods

Account Title             DR.            CR.

Balance                     18,000

Work in Process $303,800

Cost of Goods Sold               $300,600

Bal.                                            $21,200

Cost of goods sold (adjusted)

Account Title          DR.            CR.

Finished Goods $300,600

Underapplied         $6,590

Income Statement                $307,190

Prepaid expenses

Account Title          DR.            CR.

Balance               $2,150

Insurance Expense               $1,300

Balance                                      850

Manufacturing overhead

Account Title          DR.            CR.

Raw materials     $16,900

Salaries               $43,200

Depreciation       $39,200

Miscellaneous    $46,650

Insurance              $1,040

Work in Process                  $140,400

Bal. (underapplied)                 $6,590

Selling Expense

Account Title          DR.            CR.

Salaries               49,050

Others              $39,050

Insurance                 260

Depreciation     $16,800

Income Summary                $105,400

Property, plant, and equipment (net) 105,000

Depreciation for the year                - $56,000

Balance                                            = $49,000

Accounts payable

Account Title          DR.            CR.

Balance                               $16,900

Raw materials                    $76,200

Overhead                          $46,650

Cash                $62,000

Balance            $77,750

Income Statement and Statement of Retained Earnings:

Sales Revenue            $416,840

Cost of goods sold       307,190

Gross profit                $109,650

Salaries        49,050

Selling          39,050

Insurance          260

Depreciation 16,800  $105,160

Net Income                   $4,490

Retained earnings       171,300

Retained earnings    $175,790

a. money supply  

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