Use the Following Accounts and Information to Prepare,in Good Form,an

question 150

Essay

Use the following accounts and information to prepare,in good form,an income statement,statement of retained earnings,and balance sheet for Cray Enterprises for the year ended December 31,2010.
$\begin{array}{lrlr}\text { Accounts Payable } & \$ 4,800 & \text { Land } & \$ 39,000 \\\text { Accounts Receivable } & 600 & \text { Notes Payable } & 6,000 \\\text { Buildings } & 52,000 & \text { Rent Expense } & 3,600 \\\text { Cash } & 26,200 & \text { Retained Earnings, } & 84,400 \\& & \text { December 31, 2009 } \\\text { Commissions Earned } & 19,000 & \text { Salaries Expense } & 8,400 \\\text { Common Stock } & 20,000 & \text { Supplies } & 400 \\\text { Dividends } & 3,000 & & \\\text { Insurance Expense } & 1,000 & &\end{array}$

Recognize the role of direct labor-hours in variable overhead application.

Understand the process of budgeting machine-hours and its effect on overhead costs.

Calculate and interpret the standard costs and actual costs differences.

Analyze the impact of actual production levels on standard cost variances.

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Definitions:

Inheritance

Assets received from someone who has died, possibly subject to taxes depending on the value and the beneficiary's relationship to the deceased.

Holding Period

The length of time an investment is held by an investor, influencing tax treatment of gains or losses upon disposal.

Adjusted Basis

The net cost of an asset after adjusting for various tax-related items including improvements, sales, depreciation, and damage.

Assumes Liability

The act of taking on legal responsibility or debt from another party, often occurring in business acquisitions or financial agreements.