Question

The following data is provided for Garcon Company and Pepper Company.

	Garcon Company					Pepper Company
Beginning finished goods inventory		$	13,500			$	19,300
Beginning work in process inventory			15,300				23,550
Beginning raw materials inventory (direct materials)			9,200				12,600
Rental cost on factory equipment			27,250				23,950
Direct labor			19,200				41,000
Ending finished goods inventory			20,750				15,700
Ending work in process inventory			22,900				21,200
Ending raw materials inventory			6,100				9,800
Factory utilities			13,200				16,000
Factory supplies used (indirect materials)			13,900				4,500
General and administrative expenses			22,000				48,500
Indirect labor			1,350				8,260
Repairs—Factory equipment			7,820				2,500
Raw materials purchases			46,000				61,000
Selling expenses			63,200				48,100
Sales			207,030				340,010
Cash			22,000				21,700
Factory equipment, net			242,500				160,825
Accounts receivable, net			15,000				23,700

Required:
1. Prepare income statements for both Garcon Company and Pepper Company.
2. Prepare the current assets section of the balance sheet for each company.

Answer 1

		Garcon company
		Income Statement
Sales				207,030
less:Cost of goods sold				116,970
Gross Profit				90,060
Operating expense
General & administrative expense				22,000
Selling expense				63,200
Income (loss)before tax				4,860
Pepper company
Income Statement
Sales				340,010
less:Cost of goods sold				165,960
Gross Profit				174,050
Operating expense
General & administrative expense				48,500
Selling expense				48,100
Income (loss)before tax				77,450
Garcon company
Partial Balance Sheet
Cash				22,000
Accounts receivable,net				15,000
Invetories
Raw Materials inventory			6,100
Work in process inventory			22,900
Finished goods inventory			20,750
				49,750
Total current assets				86,750
Pepper company
Income statement
Cash				21,700
Accounts receivable,net				23,700
Invetories
Raw Materials inventory			9,800
Work in process inventory			21,200
Finished goods inventory			15,700
				46,700
Total current assets				92,100
note cost of goods sold= opening inventories+ all production costs-
closing inventories

working

Required 1
				Garcon	Pepper
				company	Company
Direct Materials
Beginning raw materials inventory				9,200	12,600
Raw materials purchases				46,000	61,000
Raw materials available for use				55,200	73,600
Ending raw materials inventory				6,100	9,800
Direct materials used				49,100	63,800
Direct labor				19,200	41,000
Factory overhead
Rental cost on factory equipment				27,250	23,950
Factory utilities				13,200	16,000
Factory supplies used				13,900	4,500
Indirect labor				1,350	8,260
Repairs- factory equipment				7,820	2,500
Total factory overhead				63,520	55,210
total manufacturing costs				131,820	160,010
Add:Beginning work in process				15,300	23,550
total cost of WIP				147,120	183,560
less:Ending work in process inventory				22,900	21200
Cost of goods manufactured				124,220	162,360

				Garcon	Pepper
				Company	Company
Beginning finished goods inventory				13,500	19,300
Add:Cost of goods manufactured				124,220	162,360
Cost of goods available for sale				137,720	181,660
less:Ending finished goods inventory				20,750	15,700
Cost of goods sold				116,970	165,960