On December 31,2010,Madison Company Prepared an Income Statement and a Balance

question 61

Short Answer

On December 31,2010,Madison Company prepared an income statement and a balance sheet.In making the adjusting entries at year-end,Madison failed to record the adjusting entry for wages earned by employees,but not yet paid,amounting to $5,000 for the last four days of the year.The income statement reported net income of $52,000.The balance sheet reported total assets of $254,000,total liabilities of $170,000 and stockholders' equity of $84,000.
Complete the following tabulation to show the correct amounts for the financial statements (ignore income taxes). $$\begin{array} { | l | l | l | l | l | } \hline \text { Item } & \text { Net Income } & \text { Assets } & \text { Liabilities } & \begin{array} { l } \text { Stockholders' } \\\text { Equity }\end{array} \\\hline \text { Balances reported } & \$ 52,000 & \$ 254,000 & \$ 170,000 & \$ 84,000 \\\hline \text { Correction for wages } & & & & \\\hline \text { Corrected balances } & & & & \\\hline\end{array}$$

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Definitions:

Raw Materials Inventory

The total cost or value of all the raw materials that are to be used in production and are currently stored in inventory.

Raw Materials Production Needs

The quantity and type of raw materials required to meet production targets based on the designed product and manufacturing processes.

Raw Materials Cost

The expense associated with acquiring the unprocessed materials required in the manufacture of products.

Cash Collected

The total amount of money received from sales, services, or other business activities.