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the year, and that all purchases will be paid for during the month
following the purchase.
2006 WAGE AND SALARY INFORMATION
The accrued wage account will include all direct labor, indirect
labor, sales commissions and salaries, and administrative salaries.
All wages are earned evenly throughout the year, and employees are
paid twice each month. On December 31, 2006, the accrued wages
will include wages representing one full payroll period.
2006 ACCRUED OTHER INFORMATION
This account includes all other cash expenses not included in
Account Payable and Accrued Wages. It is the company's policy to
pay all other expenses during the month following the purchase.
These expenses will be incurred evenly throughout the year. The
20% fringe benefits will be paid on all wages, salaries, and
commissions.
2006 PROPERTY, PLANT AND EQUIPMENT INFORMATION
Property, plant and equipment consist of the following on December
31, 2005:
Property and plant $750,000
Equipment
1,025,000
Total Property, Plant and Equipment
$1,775,000
Each additional machine that is needed to support the production
level expected during 2006 will cost $30,000 and be depreciated over
five years using the straight-line method. Assume that any
equipment purchases are made on the first day of the January and
are operational throughout the entire year.