In: Accounting
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.
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.
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 |
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 |