General Journal

Num Account Dr
1) Account Receivable 2562000
Sales
Sales Return & Allowances 19200
Account Receivable
Sales Discount 49200
Account Receivable
2) Manufacture Plant & Equipment 144000
Cash
Prepaid Manufacture Tax & Insurance 78000
Cash
Material Inventory 825000
Account Payable
Supplies Expense 66000
Account Payable
Direct Manufacture Labor 492000
Indirect Manufacture Labor 198000
Social, secure, tax 49200
Power, heat, light 135600
Cash
WIP Inventory 874800
Direct Manufacture Labor
Inirect Manufacture Labor
Social, secure, tax
Power, heat, light
Selling administration 522000
Cash
3) Depreciation exp - manufacture building & Equipment 140400
Accumulated depr - manuf bld & eqp
WIP inventory 140400
Accumulated depr - manuf bld & eqp
Taxes and insurance expense 52800
Prepaid tax and insurance
WIP inventory 52800
Prepaid tax and insurance
Supplies used 61200
Supplies
WIP inventory 61200
Supplies
WIP inventory 811000
Material inv
4) Finished good inventory 1901952
WIP inv
5) Cost of good sold 1806624
FG inv
6) Cash 264000
Bank notes payable
 Interest exp 38400
Cash
7) Cash 2604000
A/R
8) A/P 788400
Cash
Income tax payable 9000
Cash
9) Income tax expense 58000
Income tax payable
Cash
10) Retained earnings 36000
Dividend Payable
Dividend Payable 36000
Cash
TOTAL 14877176
Cr

2562000

19200

49200

144000

78000

825000

66000

874800

492000
198000
49200
135600

522000

140400

140400

52800

52800

61200

61200

811000

1901952

1806624

264000
 38400

2604000

788400

9000

5800
52200

36000

36000
14877176
 T Accounts
Cash & Marketable Manufacture Plant & Equipment
Dr Cr Dr Cr
118440 144000 2678400
264000 78000 144000
2604000 874800 2822400
522000
788400 Material Inventory
38400 Dr Cr
9000 788400
522000 825000
36000 124520
443640
Supplies Inventory
Account Receivable Dr Cr
Dr Cr 17280 61200
311760 19200 66000
2562000 49200 22080
2604000
201360 Prepaid Tax and Manufacture
Dr Cr
Account Payable 66720 52800
Dr Cr 78000
78400 185760 91920
825000
66000 Acc. Depreciation Manuf Building & Equipment
288360 Dr Cr
907200
WIP Inventory 140400
Dr Cr 1047600
172200 1901952
874800 Finished Good Inventory
140400 Dr Cr
52800 257040 1806624
61200 1901952
811000 352368
210448
Income Tax Payable
Capital Stock Dr Cr
Dr Cr 9000 9000
1512000 5800
5800
Retained Earning
Dr Cr Bank Notes Payable
 19200 829560 Dr Cr
49200 2562000 28840
522000 264000
1806624 552840
38400
58000
36000
862136
 Browning Manufacturing Co
Projected Statement Cost Of Good Sold (December 31, 2006)
Finished goods inventory 1/1/06 257040
Work in process 1/1/06 172200
Material used
Beginning 110520
Add. Purchases 825000
Less. Ending 124520 -
811000
Factory Expenses :
Direct manufacturing labor 492000
Factory Overhead :
Indirect manufacturing labor 198000
Power, heat, and light 135600
Depreciation of plant 140400
Social, security, taxes 49200
Taxes and insurance 52800
Supplies used 61200 +
637200 +
2112400
Less. Work In Process Inventory 12/31/06 210448 -
Cost of Goods Manufactured 1901952 +
2158992
Less. Finished Good Inventory 12/31/06 352368 -
Cost of Good Sold 1806624
 Browning Manufacturing Co
Projected Balance Sheet (December 31, 2006)
Assets
Current Assets
Cash and Marketable Securities 443640
Account Receivable 201360
Inventories :
Materials 124520
Work In Process 210448
Finished Goods 352368
Supplies 22080 +
709416
Prepaid taxes and insurance 91920 +
Total current assets 1446336
Non-Current Assets
Manufacturing plant 2822400
Less. Accumulated depreciation 1047600 -
1774800 +
Total Assets 3221136
Liabilities and Shareholder's Equity
Current Liabilities
Accounts Payable 288360
Notes Payable 252840
Income Tax Payable 5800
Total Current Liabilities 547000
Shareholder's Equity
Capital Stock 1512000
Retained Earnings 862136
2374136
Total Liabilities & Shareholder's Equity 2921136
 Browning Manufacturing Co
Income Statement (December 31, 2006)
Sales 2562000
Less. Sales and Return Allowances 19200
Sales Discount 49200
68400
Net Sales 2493600
Less. Cost of Good Sold 1806624 -
Gross Margin 686976
Less. Selling and Administrative Expenses 522000 -
Operating Income 164976
Less. Interest Expense 38400 -
Income Before Tax 126576
Less. Estimated Income Tax Expense 58000 -
Net Income 68576
2 2006 is better than 2005
Because sales is increase

2006 is worse than 2005

Because selling and adm exp increase
27.55% Gross margin percentage for 2006
29.80% Gross margin percentage for 2005

3 Yes, the cash is sufficient to pay $350.000 of note payable

4 Inventory turnover COGS
inventory

1806624
2006 =
709416

1568280
2005 =
557040

The inventory turnover is slightly decrease in 2006, marketing manager and sales manager should generate more sa
5 A/R in 2010 is decreasing so the collection of A/R is better than 2005, but there is a possibility that there are custom
 gross margin decrease

2.5466355425

2.8153813012

es manager should generate more sales to increase this turnover by develop new marketing strategies
is a possibility that there are customer that can't pay their debt and we have to written off their A/R