Question

In: Accounting

Manufacturing Income Statement, Statement of Cost of Goods Manufactured Several items are omitted from the income...

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

On
Company
Off
Company
Materials inventory, December 1 $77,420 $99,870
Materials inventory, December 31 (a) 112,850
Materials purchased 196,650 (a)
Cost of direct materials used in production 207,490 (b)
Direct labor 291,870 224,710
Factory overhead 90,580 111,850
Total manufacturing costs incurred in December (b) 646,160
Total manufacturing costs 738,590 738,590
Work in process inventory, December 1 148,650 240,690
Work in process inventory, December 31 125,420 (c)
Cost of goods manufactured (c) 640,170
Finished goods inventory, December 1 130,840 111,850
Finished goods inventory, December 31 137,030 (d)
Sales 1,141,170 998,700
Cost of goods sold (d) 646,160
Gross profit (e) (e)
Operating expenses 148,650 (f)
Net income (f) 221,710

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter On Company Off Company
a. $ $
b. $ $
c. $ $
d. $ $
e. $ $
f. $ $

2. Prepare On Company's statement of cost of goods manufactured for December.

Page: On Company
DATE ACCOUNT CREDITED PURCH.
NO.
POST.
REF.
PURCHASES DR.
ACCTS. PAY. CR.
1 Statement of Cost of Goods Manufactured For the Month Ended December 31 $ Direct materials: 1
2 $ 2
3 $ $ 3
4 Total manufacturing costs incurred during December 4
5 Total manufacturing costs $ 5
6 $ 6
7 7
8 8
9 9
10 10
11 11
12 12
13 13

3. Prepare On Company's income statement for December.

Page: On Company
DATE ACCOUNT CREDITED PURCH.
NO.
POST.
REF.
PURCHASES DR.
ACCTS. PAY. CR.
1 Income Statement For the Month Ended December 31 $ Cost of goods sold: 1
2 $ 2
3 $ 3
4 $ 4
5 $ 5
6 6
7 7
8 8
9 9
10 10

Solutions

Expert Solution

ANSWER:

Required 1)

ON COMPANY:

a) Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31

207,490 = 77,420 + 196,650 - Materials inventory, December 31

Materials inventory, December 31 = 77,420 + 196,650 - 207,490 = $66,580

b) Total manufacturing costs incurred in December

= Cost of direct materials used in production + Direct labor + Factory overhead

= 207,490 + 291,870 + 90,580 = $589,940‬

c) Cost of goods manufactured

= Total manufacturing costs - Work in process inventory, December 31

= 738,590 - 137,030 = $601,560

d) Cost of goods sold

= Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31

= 130,840 + 601,560 - 137,030 = $595,370

e) Gross profit = Sales - Cost of goods sold

Gross profit = 1,141,170 - 595,370 = $545,800

f) Net income = Gross profit - Operating expenses

Net income = 545,800‬ - 148,650 = $397,150‬

Required 2)

OFF COMPANY:

b) Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead

646,160 = Cost of direct materials used in production + 224,710 + 111,850

Cost of direct materials used in production = 646,160 - 224,710 - 111,850 = $309,600

a) Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31

309,600 = 99,870 + Materials purchased - 112,850

Materials purchased = 309,600 - 99,870 + 112,850 = $322,580

c) Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31

640,170 = 738,590 - Work in process inventory, December 31

Work in process inventory, December 31 = 738,590 - 640,170 = $98,420

d) Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31

646,160 = 111,850 + 640,170 - Finished goods inventory, December 31

Finished goods inventory, December 31 = 111,850 + 640,170 - 646,160 = $105,860

e) Gross profit = Sales - Cost of goods sold

Gross profit = 998,700 - 646,160 = $352,540‬

f) Operating Expenses = Gross profit - Net Income

Operating Expenses = 352,540 - 221,710 = $130,830

Required 3)

On company

Statement of cost of goods manufactured

For the month Ended December 31

Particulars Amount
Direct Material Used:
Material Inventory, December 1 77,420
Add: Materials Purchased 196,650
Less: Material Inventory, December 31 (66,580)
Cost of Direct material used on production 207,490‬
Direct Labor 291,870
Factory Overhead 90,580
Total manufacturing cost incurred during the year 589,940
Add: Work in process inventory, December 1 148,650
Total manufacturing cost accounted for 738,590‬
Less: Work in process inventory, December 31 (137,030)
Cost of goods manufactured 601,560‬

Required 4)

On company

Income Statement

For the month Ended December 31

Particulars Amount
Sales 1,141,170
Less: Cost of goods sold
Finished goods inventory, December 1 130,840
Add: Cost of goods manufactured 601,560
Cost of finished goods available for sale 732,400‬
Less: Finished goods inventory, December 31 (137,030)
Cost of goods sold (595,370)
Gross Profit 545,800
less: Operating Expense (148,650)
Net income 397,150

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