Question

1. Statement of Cost of Goods Manufactured and Income Statement for a Manufacturing Company

   The following information is available for Shanika Company for 20Y6:

   Inventories	January 1		December 31
   Materials	$373,870		$471,080
   Work in process	672,970		640,670
   Finished goods	646,800		654,800

   Advertising expense	$319,860
   Depreciation expense-office equipment	45,220
   Depreciation expense-factory equipment	60,770
   Direct labor	725,460
   Heat, light, and power-factory	24,030
   Indirect labor	84,790
   Materials purchased	711,330
   Office salaries expense	248,260
   Property taxes-factory	19,790
   Property taxes-headquarters building	40,980
   Rent expense-factory	33,450
   Sales	3,330,540
   Sales salaries expense	408,900
   Supplies-factory	16,490
   Miscellaneous costs-factory	10,360

   Required:

   1. Prepare the 20Y6 statement of cost of goods manufactured.

   Shanika Company
   Statement of Cost of Goods Manufactured
   For the Year Ended December 31, 20Y6
   Depreciation expense-factory equipment Indirect labor Supplies Work in process inventory, January 1, 20Y6			$
   Direct materials:
   Materials inventory, January 1, 20Y6 Rent expense-factory Supplies-factory Work in process inventory, December 31, 20Y6	$
   Indirect labor Property taxes-headquarters building Purchases Work in process inventory, December 31, 20Y6
   Cost of materials available for use Supplies-factory Work in process inventory, January 1, 20Y6 Work in process inventory, December 31, 20Y6	$
   Indirect labor Materials inventory, December 31, 20Y6 Miscellaneous cost-factory Work in process inventory, December 31, 20Y6
   Cost of direct materials used in production Cost of finished goods available for sale Cost of goods manufactured Cost of goods sold		$
   Depreciation expense-factory equipment Direct labor Indirect labor Supplies-factory
   Factory overhead:
   Indirect labor Materials inventory, January 1, 20Y6 Purchases Sales	$
   Depreciation expense-factory equipment Depreciation expense-office equipment Direct labor Purchases
   Direct labor Heat, light, and power-factory Materials inventory, January 1, 20Y6 Work in process inventory, December 31, 20Y6
   Cost of materials available for use Direct labor Property taxes-factory Property taxes-headquarters building
   Purchases Rent expense-factory Rent expense-headquarters building Sales salaries expense
   Cost of goods sold Direct labor Purchases Supplies-factory
   Advertising expense Cost of materials available for use Direct materials Miscellaneous costs-factory
   Total factory overhead
   Total manufacturing costs incurred in 20Y6
   Total manufacturing costs			$
   Cost of materials available for use Direct materials Materials inventory, December 31, 20Y6 Work in process inventory, December 31, 20Y6
   Cost of goods manufactured			$

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   2. Prepare the 20Y6 income statement.

   Shanika Company
   Income Statement
   For the Year Ended December 31, 20Y6
   Cost of goods sold Gross profit Indirect labor Sales			$
   Cost of good sold:
   Advertising expense Finished goods inventory, January 1, 20Y6 Finished goods inventory, December 31, 20Y6 Sales		$
   Cost of direct materials used in production Cost of finished goods available for sale Cost of goods manufactured Cost of goods sold
   Cost of direct materials used in production Cost of finished goods available for sale Cost of goods sold Cost of materials available for use		$
   Depreciation expense-office equipment Finished goods inventory, December 31, 20Y6 Net loss Plus finished goods inventory, December 1, 20Y6
   Cost of direct materials used in production Cost of finished goods available for sale Cost of goods sold Cost of materials available for use
   Cost of goods sold Gross profit Property taxes-headquarters building Sales			$
   Operating expenses:
   Administrative expenses:
   Cost of goods sold Office salaries expense Sales Sales salaries expense	$
   Advertising expense Depreciation expense-factory equipment Depreciation expense-office equipment Gross profit
   Cost of goods sold Property taxes-factory Property taxes-headquarters building Sales		$
   Selling expenses:
   Advertising expense Cost of goods sold Office salaries expense Sales	$
   Direct labor Office salaries expense Sales Sales salaries expense
   Total operating expenses
   Net income Net loss			$

Answer 1

Ans. 1	SHANIKA COMPANY
	Schedule of Cost of Goods Manufactured
	For the Year Ended December 31, 20Y6
	Particulars	Amount	Amount
	Direct materials :
	Beginning raw materials inventory	$373,870
	Add: Purchase of direct materials	$711,330
	Raw materials available	$1,085,200
	Less: Ending raw materials inventory	-$471,080
	Direct materials used (A)		$614,120
	Direct labor (B)		$725,460
	Manufacturing overhead applied:
	Indirect labor	$84,790
	Depreciation expense - factory equipment	$60,770
	Property taxes - factory	$19,790
	Heat, light and power - factory	$24,030
	Rent expense - factory	$33,450
	Miscellaneous costs - factory	$10,360
	Supplies - factory	$16,490
	Total manufacturing overhead ©		$249,680
	Total manufacturing costs (A+B+C)		$1,589,260
	Add: Beginning Work in process inventory		$672,970
	Less: Ending Work in process inventory		-$640,670
	Cost of goods manufactured		$1,621,560
	*All manufacturing costs are listed under cost of goods manufactured statement.
Ans. 2	SHANIKA COMPANY
	Income Statement
	For the Year Ended December 31, 20Y6
	Particulars	Amount	Amount
	Sales revenue		$3,330,540
	Less: Cost of goods sold:
	Cost of Goods Manufactured	$1,621,560
	Add: Beginning finished goods inventory	$646,800
	Cost of goods available for sale	$2,268,360
	Less: Ending finished goods inventory	-$654,800
	Cost of goods sold		$1,613,560
	Gross margin		$1,716,980
	Less: Operating expenses:
	Administrative expenses :
	Depreciation expense - office equipment	$45,220
	Property taxes - headquarters building	$40,980
	Office salaries expense	$248,260
	Selling expenses :
	Advertising expenses	$319,860
	Sales salaries salaries	$408,900
	Total operating expenses		$1,063,220
	Net Income		$653,760
	*Selling, administrative, office and general exenses are operating expenses so
	these are listed in income statement.