Question

In: Accounting

Empire Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced...

Empire Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for the month of October 2020.

EMPIRE COMPANY
Income Statement
For the Month Ended October 31, 2020
Sales revenue               $795,000   
Less:   Operating expenses                  
Raw materials purchases       $264,600           
Direct labor cost       190,200           
Advertising expense       91,000           
Selling and administrative salaries       77,800           
Rent on factory facilities       61,000           
Depreciation on sales equipment       45,800           
Depreciation on factory equipment       32,500           
Indirect labor cost       28,200           
Utilities expense       11,600           
Insurance expense       8,300        811,000   
Net loss               $(16,000)  

Prior to October 2020, the company had been profitable every month. The company’s president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows.

1. Inventory balances at the beginning and end of October were:

October 1
October 31
Raw materials       $19,700       $36,000
Work in process       19,400       14,700
Finished goods       29,900       53,500

2. Only 75% of the utilities expense and 60% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities.


Prepare a correct income statement for October 2020.

Solutions

Expert Solution

solution:-


Related Solutions

Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced...
Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales revenue $ 793,800 Less: Operating expenses Raw materials purchases $ 263,200 Direct labor cost 188,900 Advertising expense 91,000 Selling and administrative salaries 77,000 Rent on factory facilities 61,500 Depreciation on sales equipment 45,200 Depreciation on factory equipment 32,500...
Sheffield Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced...
Sheffield Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for the month of October 2020. SHEFFIELD COMPANY Income Statement For the Month Ended October 31, 2020 Sales revenue $794,100 Less: Operating expenses Raw materials purchases $264,900 Direct labor cost 190,100 Advertising expense 92,500 Selling and administrative salaries 76,100 Rent on factory facilities 62,600 Depreciation on sales equipment 44,000 Depreciation on factory equipment 32,600 Indirect labor...
Waterway Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced...
Waterway Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for the month of October 2020. WATERWAY COMPANY Income Statement For the Month Ended October 31, 2020 Sales revenue $794,700 Less: Operating expenses Raw materials purchases $263,200 Direct labor cost 188,000 Advertising expense 92,400 Selling and administrative salaries 77,500 Rent on factory facilities 62,800 Depreciation on sales equipment 45,100 Depreciation on factory equipment 32,600 Indirect labor...
Coronado Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced...
Coronado Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for the month of October 2020. Prepare a correct income statement for October 2020. CORONADO COMPANY Income Statement For the Month Ended October 31, 2020 Sales revenue $794,300 Less: Operating expenses Raw materials purchases $264,700 Direct labor cost 192,000 Advertising expense 92,000 Selling and administrative salaries 76,100 Rent on factory facilities 62,300 Depreciation on sales equipment...
Problem 14-5A Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017....
Problem 14-5A Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales revenue $ 794,800 Less: Operating expenses Raw materials purchases $ 264,900 Direct labor cost 189,100 Advertising expense 91,500 Selling and administrative salaries 77,600 Rent on factory facilities 61,600 Depreciation on sales equipment 45,000 Depreciation on factory...
Problem 14-5A (Part Level Submission) Empire Company is a manufacturer of smart phones. Its controller resigned...
Problem 14-5A (Part Level Submission) Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017. An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales revenue $ 780,000 Less: Operating expenses Raw materials purchases $ 264,000 Direct labor cost 190,000 Advertising expense 90,000 Selling and administrative salaries 75,000 Rent on factory facilities 60,000 Depreciation on sales equipment 45,000...
Problem 2-44A Tombert Company is a manufacturer of computers. Its controller resigned in October 2016. An...
Problem 2-44A Tombert Company is a manufacturer of computers. Its controller resigned in October 2016. An inexperienced assistant accountant has prepared the following income statement for the month of October 2016. TOMBERT COMPANY Income Statement For the Month Ended October 31, 2016 Sales (net) $ 784,600 Less: Operating expenses   Raw materials purchases $264,450   Direct labour cost 190,900   Advertising expense 89,300   Selling and administrative salaries 74,450   Rent on factory facilities 60,750   Depreciation on sales equipment 44,700   Depreciation on factory equipment 31,800...
Sunland Company, a manufacturer of audio systems, started its production in October 2020. For the preceding...
Sunland Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Sunland had been a retailer of audio systems. After a thorough survey of audio system markets, Sunland decided to turn its retail store into an audio equipment factory. Raw material costs for an audio system will total $77 per unit. Workers on the production lines are on average paid $13 per hour. An audio system usually takes 6 hours to complete. In...
Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding...
Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory. Raw material costs for an audio system will total $77 per unit. Workers on the production lines are on average paid $15 per hour. An audio system usually takes 7 hours to complete. In...
Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding...
Bell Company, a manufacturer of audio systems, started its production in October 2020. For the preceding 3 years, Bell had been a retailer of audio systems. After a thorough survey of audio system markets, Bell decided to turn its retail store into an audio equipment factory. Raw material costs for an audio system will total $75 per unit. Workers on the production lines are on average paid $14 per hour. An audio system usually takes 5 hours to complete. In...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT