Requirements (Part one):Prepare an income statement for Petunia's Posies, a merchandiser, for the year ended December...

Requirements (Part one):Prepare an income statement for Petunia's Posies, a merchandiser, for the year ended December 31, 2016.

Part One: In 2015, Petunia Conway opened Petunia's Posies, a small retail shop selling floral arrangements

On December 31, 2016, her accounting records show the following:

Sales revenue. . . . . . . . . . . . . . . .	$51,000
Utilities for shop. . . . . . . . . . . . . .	$1,200
Inventory on December 31, 2016. .	$9,900
Inventory on January 1, 2016. . . . .	$12,600
Rent for shop. . . . . . . . . . . . . . . .	$3,200
Sales commisions. . . . . . . . . . . . .	$4,300
Purchases of merchandise. . . . . .	$38,500

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Requirements (Part two):

Calculate the Cost of Goods Manufactured for

Floral Mart

Manufacturing for the year ended December31,

2017.

Prepare an income statement for

Floral Mart

Manufacturing for the year ended December 31,

2017.

How does the format of the income statement for

Floral Mart

Manufacturing differ from the income statement of

Petunia's Posies?

Part Two: Petunia's Posies was so successful that Petunia decided to manufacture her own brand of floral supplies: Floral Mart Manufacturing.

At the end of December 2017, her accounting records show thefollowing:

Utilities for plant. . . . . . . . . . . . . . . . . . . . . . . . .	$5,100
Delivery expense. . . . . . . . . . . . . . . . . . . . . . . .	$4,500
Sales salaries expense. . . . . . . . . . . . . . . . . . . .	$5,000
Plant janitorial services. . . . . . . . . . . . . . . . . .	$1,750
Work in process inventory, December 31, 2017. . .	$5,500
Finished goods inventory, December 31, 2016. . .	$0
Finished goods inventory, December 31, 2017. . .	$2,000
Sales revenue. . . . . . . . . . . . . . . . . . . . . . . . . .	$103,000
Customer service hotline expense. . . . . . . . . . .	$1,800
Direct labor. . . . . . . . . . . . . . . . . . . . . . . . . . . . .	$27,000
Direct material purchases. . . . . . . . . . . . . . . . . .	$39,000
Rent on manufacturing plant. . . . . . . . . . . . . . . .	$8,200
Raw materials inventory, December 31, 2016. . . .	$17,000
Raw materials inventory, December 31, 2017. . . .	$8,500
Work in process inventory, December 31, 2016. . .	$0

Part Three: Show the ending inventories that would appear on these balance sheets:

1.	Petunia's Posies at December 31, 2016
2.	Floral Mart Manufacturing at December 31,

Solutions

Expert Solution

Requirements ( Part one)
	Income Statement for Petunia's Posies for the year ended December 31, 2016
	Particulars	Amount	Particulars	Amount
	Opening Inventory ( Inventory as on 01.01.2016)	12600	Sale Revenue	51000
	Purchase of Merchandise	38500	Closing Inventory ( Inventory as on 31.12.2016)	9900
	Gross Profit	9800
	Total	60900	Total	60900

	Utilities for Shop	1200	Gross Profit c/d	9800
	Rent for Shop	3200
	Sales Commission	4300

	Net Profit	1100
	Total	9800	Total	9800

Requirement ( Part Two)

1	Cost of Goods Sold
	Opening Inventory + Purchases - closing Inventory
	Opening Inventory	Amount	17000
	Raw materials inventory, December 31, 2016. . . .	$17,000
	Finished goods inventory, December 31, 2016. . .	$0
	Work in process inventory, December 31, 2016. . .	$0
Add:	Purchases		39000
Less:	Closing Inventory
	Raw materials inventory, December 31, 2017. . . .	$8,500
	Finished goods inventory, December 31, 2017. . .	$2,000
	Work in process inventory, December 31, 2017. . .	$5,500	-16000
	Direct Material		40000
Add:	Direct Labour		27000
Add:	Manufacturing OH
	Utilities for Plant		5100
	COGS		72100
	Here the item represented as 31December 2016 will be showing as Opening value as on 01.01.2017

2	Income Statement for Floral Mart Manufacturing for the year ended December 31, 2017
	Particulars	Amount	Particulars	Amount
	Direct Material Purchases	39000	Sale Revenue	103000
	Opening Finished Goods Inventory 31.12.2016	0	Raw Material Inventory 31.12.2017	8500
	Opening Raw Material Inventory 31.12.2016	17000	Work In Progress Inventory 31.12.2017	5500
	Work In Progress Inventory 31.12.2016	0	Finished Goods Inventory 31.12.2017	2000
	Direct Labour	27000
	Utilities for Plant	5100

	Gross Profit b/d	30900
	Total	119000	Total	119000

	Customer Service hotline expenses	1800	Gross Profit c/d	30900
	Delivery Expenses	4500
	Plant Janitorial Expenses	1750

	Net Profit	22850
	Total	30900	Total	30900

3	Difference :
a.	Earlier he was only trader, Now Manufacturere hence the manufacturing expenses will be part of trading account. And Admin expenses will part of P and L A/c


b.	Earlier, No WIP in account, now WIP to be recorded and for each types of inventory Raw Material, WIP and Finished Goods to be maintained

c.	Expesnes charged to P and L only, where as in Floral Manufacturing expenses directly associated with manufacturing charge to COGS / Trading A/c and non related to factory expenses charged to P and L A/c


Part Three:
	Ending Inventory in Petunia's Poises 31.12.2016
	Closing Inventory ( Inventory as on 31.12.2016)	9900

	Ending Inventory in Floral Mart Manufacturing 31.12.2017
	Raw Material Inventory 31.12.2017	8500
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Requirements (Part one):Prepare an income statement for Petunia's Posies​, a​ merchandiser, for the year ended December​...

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Requirements (Part one):Prepare an income statement for Petunia's Posies, a merchandiser, for the year ended December...