Review problem; transactions and statements LO₃ Lift-Up Inc. manufactures chain hoists. The raw materials inventories on hand October I 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; pulley 2,000 units, $10,200; steel plates—5,000 units, $3,000.

d. Sales on account for the month, $ 1 26,375.

e. Accounts receivable collected, $72,500.

f. Materials used during October (FIFO costing): chain, 14,000 pounds; pulleys, 4,400 units; bolts and taps, 4,000 sets; steel plates, 3,800 units.
g. Payroll paid, $31,000.
h. Factory supplies on hand, October 3 1 , $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.
I. Factory superintendence paid, $ 1 ,800.
m. Expired insurance—on office equipment, $100; on factory machinery, $300.
n. Factory rent paid, $2,000.
0. Depreciation on office equipment, $400; on office furniture, $180; on machinery, $1,200.
p. Factory overhead charged to jobs, $ I 1 ,950.
q. Work in Process, October 3 1 , $3 1 ,000. (Hint: The difference between the total charges to Work in Process during the period and the ending balance in Work in Process represents the cost of the goods completed.)
r. Cost of goods sold during the month, $84,250.
s. Accounts payable paid, $33,750.
Required:
1. Set upT-accounts and enter the balances as of October I.
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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Chain. Pulleys Bolts and taps. Steel plates.. 12,000 pounds. $24,000 4,000 sets, $20,000 10,000 pounds. $5,000 4,000 units. $2,000 The balances in the ledger accounts on October I were as follows: Cash...... Work in process Materials Prepaid insurance. $ 12,000 35,000 51,000 3,000 125,000 Machinery Office equipment Office furniture Accounts payable. Capital stock Retained earnings. 30,000 20,000 $ 30,000 200,000 46,000 $276,000 $276,000