What was the over-applied or under-applied overhead for year 3?
The comparative balance sheet of Posner Company, for 2011 and the preceeding year ended December 31, 2010 are:
Cash $53,000 50,000
Accts Rec 37,000 48,000
Inventories 108,500 100,000
Investments ……….. 70,000
Equipment 573,200 450,000
Acc Depreciation (142,000) (176,000)
Accounts Payable $62,500 $43,800
Bonds Payable, due 2011 …….. 100,000
Common Stock, $10 par 325,000 285,000
Paid-in Capital in excess of par
common stock 80,000 55,000
Retained earnings 162,200 58,200
The income statement for the current year is as follows:
Cost of Merchandise sold 340,000
Gross Profit $285,700
Depreciation expense $26,000
Other operating expense 68,000
Income from operations 94,000
Gain on sale of investment $4,000
Interest expense 6,000 (2,000)
Income before income tax $189,700
Income tax 60,700
Net income $129,000
Additional data for the current year are as follows:
(a) Fully depreciated equipment costing $60,000 was scraped, no salvage, and equipment was purchased for $183,200
(b) Bonds payable for $100,000 were retired by payment at their face amount.
(c) 5,000 shares of common stock were issued at $13 for cash.
(d) Cash dividends declared and paid, $25,000.
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