Question

	The following data (in thousands of dollars) have been taken from the accounting records of Larner Corporation for the year just completed:
	Sales	$870
	Purchase of raw materials	100
	Direct labour	140
	Manufacturing overhead	220
	Administrative expenses	150
	Selling expenses	150
	Raw materials inventory, beginning	50
	Raw materials inventory, ending	75
	Work-in-process inventory, beginning	60
	Work-in-process inventory, ending	5
	Finished goods inventory, beginning	120
	Finished goods inventory, ending	180
	Required:
	(a)  Prepare a schedule of cost of goods manufactured in good form.
	(b)  Compute the cost of goods sold.
	(c)  Using data from your answers above as needed, prepare an income statement in good form.

Answer 1

Answer 1 : Cost of Good Manufactured Schedule

Cost of Good Manufactured Schedule
	Particulars	Amt in $000
	Raw materials inventory, beginning	50
Add	Purchase of raw materials	100
Less	Raw materials inventory, ending	-75
	Raw Material Consumed		75
	Direct labour		140
	Manufacturing overhead		220
	Total Manufacturing Cost		435
Add	Work-in-process inventory, beginning		60
Less	Work-in-process inventory, ending		-5
	Cost of Good Manufactured		490

Answer 2: Cost of Good Sold

Cost of Good Sold
	Particulars	Amt in $000
	Finished goods inventory, beginning		120
Add	Cost of Good Manufactured (Calculated in Answer 1 )		490
Less	Finished goods inventory, ending		-180
	Cost of Good Sold		430

Answer 3 : Income Statement

Income Statement
	Particulars	Amt in $1000
	Sales	870
Less:	Cost of Good Sold (Calculated in Answer 2)	-430
	Gross Margin	440
Less:	Administrative expenses	-150
Less:	Selling expenses	-150
	Operating Income	140