Question

Required information

Problem 14-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1

[The following information applies to the questions displayed below.]
   

The following calendar year-end information is taken from the December 31, 2019, adjusted trial balance and other records of Leone Company.
   

Advertising expense	$	33,800		Direct labor	$	690,000
Depreciation expense—Office equipment		11,500		Income taxes expense		259,300
Depreciation expense—Selling equipment		9,700		Indirect labor		58,400
Depreciation expense—Factory equipment		37,500		Miscellaneous production costs		10,400
Factory supervision		115,900		Office salaries expense		62,000
Factory supplies used		9,500		Raw materials purchases		986,000
Factory utilities		35,000		Rent expense—Office space		23,000
Inventories				Rent expense—Selling space		27,200
Raw materials, December 31, 2018		154,400		Rent expense—Factory building		80,800
Raw materials, December 31, 2019		178,000		Maintenance expense—Factory equipment		38,000
Work in process, December 31, 2018		15,000		Sales		4,465,600
Work in process, December 31, 2019		19,100		Sales salaries expense		398,700
Finished goods, December 31, 2018		163,400
Finished goods, December 31, 2019		137,800

Problem 14-3A Part 2

2. Prepare the company’s 2019 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.
  

Answer 1

Leone Company
Income statement
For Year Ended December 31, 2019
Sales		4,465,600
Cost of goods sold
Finished goods inventory, December 31, 2018	163,400
Cost of goods manufactured	2,033,800
Goods available for sale	2,197,200
Less: Finished goods inventory, December 31, 2019	137,800
Cost of goods sold		2,059,400
Gross profit from sales		2,406,200
Operating expenses
Selling expenses
Sales salaries expense	398,700
Depreciation expense-selling equipment	9,700
Rent expense-selling space	27,200
Advertising expense	33,800
Total selling expenses		469,400
General and administrative expenses
Rent expense-office space	23,000
Office salaries expense	62,000
Depreciation expense-office equipment	11,500
Total general and administrative expense		96,500
Total operating expense		565,900
Income before taxes		1,840,300
Income tax expense		259,300
Net income		1,581,000
Working
Cost of goods manufactured
(154,400 + 986,000 - 178,000 + 690,000 + 37,500 + 115,900 + 9,500 + 35,000 + 80,800 + 38,000 + 10,400 + 58,400 + 15,000 - 19,100)