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The following data refer to Twisto Pretzel Company for the year 20x1.

Work-in-process inventory, 12/31/x0	$	8,000
Selling and administrative salaries		13,600
Insurance on factory and equipment		3,600
Work-in-process inventory, 12/31/x1		8,100
Finished-goods inventory, 12/31/x0		14,000
Cash balance, 12/31/x1		8,000
Indirect material used		4,300
Depreciation on factory equipment		2,100
Raw-material inventory, 12/31/x0		10,200
Property taxes on factory		2,400
Finished-goods inventory, 12/31/x1		15,200
Purchases of raw material in 20x1		39,000
Utilities for factory		6,000
Utilities for sales and administrative offices		2,400
Other selling and administrative expenses		3,800
Indirect-labor cost incurred		29,000
Depreciation on factory building		3,800
Depreciation on cars used by sales personnel		1,200
Direct-labor cost incurred		79,000
Raw-material inventory, 12/31/x1		11,000
Accounts receivable, 12/31/x1		4,100
Rental for warehouse space to store raw material		2,900
Rental of space for company president’s office		1,600
Applied manufacturing overhead		58,000
Sales revenue		205,800
Income tax expense		5,100

3. Prepare the company’s income statement for 20x1.

Answer 1

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Sales revenue					$ 205,800
Less: Cost of goods sold
Direct Material:
Raw-material inventory, 12/31/x0		$        10,200
add:Purchases of raw material in 20x1		$        39,000
Total material available		$        49,200
Raw-material inventory, 12/31/x1		$       -11,000
Total material Cost		$        38,200
Less: Indirect Material used		$         -4,300
Direct Material Cost			$ 33,900
Direct-labor cost incurred			$ 79,000
Applied manufacturing overhead			$ 58,000
Total Manufacturing incurred during period			$170,900
Add: Work-in-process inventory, 12/31/x0			$    8,000
			$178,900
Less: Work-in-process inventory, 12/31/x1			$   -8,100
Cost of goods Manufactured			$170,800
Finished-goods inventory, 12/31/x0			$ 14,000
Cost of goods available for sale			$184,800
Finished-goods inventory, 12/31/x1			$ -15,200
Unadjusted Cost of goods Sold				$ 169,600
Less: Overapplied overheads ($58,000-$51,200)				$    -6,800
Adjusted Cost of Goods Sold					$ 162,800
Gross Profit					$ 368,600
Less: Selling and Admin Expense
Selling and administrative salaries				$    13,600
Utilities for sales and administrative offices				$      2,400
Other selling and administrative expenses				$      3,800
Depreciation on cars used by sales personnel				$      1,200
Rental for warehouse space to store raw material				$      2,900
Rental of space for company president’s office				$      1,600
Total Selling and admin expense					$ -25,500
					$ 343,100
Income tax expense					$    -5,100
Net Income					$ 338,000