Review Problem for Chapters 1 and 2 Lift It, Inc., manufactures chain hoists. The raw materials inventories on hand on October 1 were as follows:

Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 pounds, $24,000

Pulleys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 sets, $20,000

Bolts and taps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 pounds, $5,000

Steel plates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 units, $2,000

The balances in the ledger accounts on October 1 were as follows:

Transactions during October were as follows:
a. Payroll recorded during the month: direct labor, $28,000; indirect labor, $3,000.
b. Factory supplies purchased for cash, $1,000. (Use a separate inventory account, Factory Supplies.)
c. Materials purchased on account: chain'4,000 pounds, $8,800; pulleys'2,000 sets, $10,200; steel plates'5,000 units, $3,000.
d. Sales on account for the month, $126,375.
e. Accounts receivable collected, $72,500.
f. Materials used during October (FIFO costing): chain, 14,000 pounds; pulleys, 4,400 sets; bolts and taps, 4,000 pounds; steel plates, 3,800 units.
g. Payroll paid, $31,000.
h. Factory supplies on hand, October 31, $350.
i. Factory heat, light, and power costs for October, $3,000 (not yet paid).
j. Office salaries paid, $6,000.
k. Advertising paid, $2,000.
l. Factory superintendence paid, $1,800.
m. Expired insurance'on office equipment, $100; on factory machinery, $300.
n. Factory rent paid, $2,000.
o. Depreciation on office equipment, $400; on office furniture, $180; on machinery, $1,200.
p. Factory overhead charged to jobs, $11,950.
q. Work in Process, October 31, $31,000.
r. Cost of goods sold during the month, $84,250.
s. Accounts payable paid, $33,750.
Required:
1. Set up T-accounts and enter the balances as of October 1.
2. Prepare journal entries to record each of the previous transactions.
3. Post the journal entries to the accounts, setting up any new ledger accounts necessary. Only controlling accounts are to be maintained; however, show the calculation for the cost of materials used.
4. Prepare a statement of cost of goods manufactured for October.
5. Prepare an income statement.
6. Prepare a balance sheet showing the classifications of current assets, plant and equipment, current liabilities, and stockholders'equity.

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Cash .. Work in process Materials .. Prepaid insurance.. .. Machinery Accumulated depreciation-machinery Office equipment . 30,000 Accumulated depreciation-office equipment. 12,000 35,000 51,000 3,000 125,000 s 10,500 4,800 20,000 Accumulated depreciation-office furniture . Accounts payable Capital stock 2,500 30,000 182,200 46,000 $276,000 $276,000 Retained earnings