On January 2hd 2017 Pierre Mercier sat down to prepare the 2016 financial statem

Question

On January 2hd 2017 Pierre Mercier sat down to prepare the 2016 financial statements for his furniture construction business WoodStyle, a sole proprietorship, which he started on January 1st, 2013 In this business, Pierre purchases wood, and uses it to make cabinets and small tables, which he then sells to independent craft stores. The balance sheet as of December 315t 2015 read as follows. Current Assets Cash Accounts Receivable: Inventory (wood): Inventory (wip): Inventory (finished goods) Fixed Assets: Woodworking Equipment: $2,400 Less: Acc. Depreciation($900) Net Equipment: $20,900 $3,600 $500 0 $600 $1,500 Current Liabilities: Wood Account Payable: Fixed Liabilities: Bank Loan Outstanding: $400 $12,000 After gathering all the receipts, payment slips and bank statements, Pierre was able to make the following list of cash receipts and disbursements: Receipts Sales Receipts: $97,000 Disbursements: Payment to Wood Supplier: Payment to blade sharpener: Wages (Leslie): Salary (Pierre): Bank Payment: Miscellaneous (administrative): $24,000 $100 $14,700 $35,000 $2,500 S3,200

Explanation / Answer

Pierre Mercier Cash Beginning Balance 20900 Payment to Wood supplier 24000 Receipt from Customer/Sales 97000 Payment to Blade sharpner 100 Wages 14700 Salary/Drawing 35000 Miscellenous 3200 Bank Interest 600 Balance Bank Payment 1900 Ending Balance 38400 117900 117900 Raw Material Inventory Beginning Balance 500 Work in Process Inventory 23800 Account payable 23600 (=24000-400) Ending Balance 300 24100 24100 Work in Process Inventory Raw Material Consumed 23800 Finished goods Inventory 38800 Wages 15000 38800 38800 Finished goods Inventory Ending Finished goods Inventory Valuation Beginning Balance 600 Cost of goods sold 38990 Wood 200 Work in Process Inventory 38800 Labor 210 Ending Balance 410 Total 410 39400 39400 2016 Income Statement Revenue from Sales 99600 =6200+97000-3600 Less : Cost of goods sold 38990 Wood sharpning expenses 100 Bank Interest 600 Depreciation 300 Miscellanous Administrative 3200 Bank charges 1900 Total Expenses 45090 Net Income 54510 Balance sheet Current Asset Cash 38400 Accounts Receivable 6200 Raw Material Inventory 300 Finished goods Inventory 410 Wood working Equipment 2400 Less : Depreciation 1200 Net Equipment 1200 Total Asset 46510 Current Liabilities Bank Loan Outstanding 12000 Wages Payable 300 Equity at begninning 14700 Add : Net Income 54510 Less : Drawing 35000 Equity at end 34210 Total Liabilities & Equity 46510

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