Reference no: EM1346343

1. On January 2nd 2013, Julie Manning sat down to arrange the 2012 financial statements for her part time residence business Manning Style, a sole proprietorship that she started on January 1st, 2010. In this business, Julie acquire different fabrics from suppliers also retailers, as well as utilize them to compose dresses, which she then sells to self-determining clothing stores. Balance sheet as of December 31st, 2011 reads as follows.
Current Assets:
Cash:

Accounts Receivable: Inventory (fabric): Inventory (finished goods) Fixed Assets:
$10,900 $3,600 $500 $160
Sewing Machine: $400 Less: Acc. Depreciation ($100)
Net Sewing Machine: Total Assets:
Current Liabilities: Fabric Account Payable: Fixed Liabilities:
Bank Loan Outstanding: Total Liabilities:
Total Equity
Total Equity and Liabilities
$300 $15,460
$500
$1,880
$2,380 $13,080 $15,460

After gathering all receipts, compensation slips and bank statements, Julie was capable to make subsequent list of cash receipts and disbursements:
Receipts:
Sales Receipts:
Disbursements:
Payment to Fabric Supplier: Wages (Anna):
Salary (Julie):
Bank Loan Payment: Miscellaneous (administrative):
$55,000
$8,000 $14,700 $15,000
$400 $3,200

Julie was overjoyed with her record level of sales, but she thinking that part of her success was due to more calm credit terms with her customers. End of the year, her customers owed her $6200. Julie has determined to keep her accounts fully paid up and at the end of the year she did not owe her provided anything. Julie's assistant Anna was contracted to be paid $15/hour. She worked 20 hours per week for 50 weeks during 2011. Anna spent two thirds of her instance sewing dresses, and the other third of her time doing administrative work. At the end of the year, Anna had performed one week's worth of work for which she had not been paid by end of the year. Julie is depreciating the sewing machine on a straight-line basis over 8 years through no salvage value. Bank loan compensation included $180 of interest. Julie paid herself $15,000 for the year, also spent half her time producing dresses; in remaining time she was dealing with clients and suppliers.

On January 2nd, Julie did a fast inventory count, and counted $300 worth of fabric. She had 1 finished dress which took Anna 4 hours to make whereas had $85 worth of fabric in it. She deliberates that she could sell the dress for $250.

(a) For 2012, what does Manning Style cash T-account look like?

(b) In the year 2012 what is total cost of goods sold (COGS) expense for Manning Style? Show the entries in all three inventory T-accounts that are relevant to the calculation.

(c) Prepare the 2012 Income Statement for Manning Style.

(d) Prepare Balance Sheet for Manning Style for the end of the year 2012.