Question

Assume that in preparing the cost of goods manufactured schedule, several errors were made. Raw materials purchases, sales revenue and factory depreciation should have been $106,400, $584,000 and $18,000 respectively. Show the impact of these changes on the cost of goods manufactured schedule, income statement and balance sheet. The following data were taken from the records of Clarkson Company for the fiscal year ended June 30, 2017.
	Raw Materials Inventory,7/1/16	$48,000		Factory Machinery Depreciation		$16,000
	Raw Materials Inventory, 6/30/17	39,600		Factory Utilities		27,600
	Finished Goods Inventory, 7/1/16	96,000		Office Utilities Expense		8,650
	Finished Goods Inventory, 6/30/17	75,900		Sales Revenue		534,000
	Work in Process Inventory, 7/1/16	19,800		Sales Discounts		4,200
	Work in Process Inventory, 6/30/17	18,600		Plant Manager's Salary		58,000
	Direct Labor	139,250		Factory Property Taxes		9,600
	Indirect Labor	24,460		Factory Repairs		1,400
	Accounts Receivable	27,000		Raw Materials Purchases		96,400
	Factory Insurance	4,600		Cash		32,000
Instructions
(a)	Prepare a cost of goods manufactured schedule. (Assume all raw materials used were direct materials.)
(b)	Prepare an income statement through gross profit.
(c)	Prepare the current assets section of the balance sheet at June 30, 2017.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .
(a)	Prepare a cost of goods manufactured schedule. (Assume all raw materials used were direct materials.)
	CLARKSON COMPANY
	Cost of Goods Manufactured Schedule
	For the Year Ended June 30, 2017
	Work in process inventory, July 1, 2016					$                                        19,800.00
	Direct materials
	Raw materials inventory, July 1, 2016			$       48,000.00
	Raw materials purchases			$       96,400.00
	Total raw materials available for use			$     144,400.00
	Less: Raw materials inventory, June 30, 2017			$       39,600.00
	Direct materials used				$      104,800.00
	Direct labor				$      139,250.00
	Manufacturing overhead
	Plant manager's salary			$       58,000.00
	Factory utilities			$       27,600.00
	Indirect labor			$       24,460.00
	Factory machinery depreciation			$       16,000.00
	Factory property taxes			$         9,600.00
	Factory insurance			$         4,600.00
	Factory repairs			$         1,400.00
	Total manufacturing overhead				$      141,660.00
	Total manufacturing costs					$                                      385,710.00
	Total cost of work in process					$                                      405,510.00
	Less: Work in process, June 30					$                                        18,600.00
	Cost of goods manufactured					$                                      386,910.00
(b)	Prepare an income statement through gross profit.
	CLARKSON COMPANY
	(Partial) Income Statement
	For the Year Ended June 30, 2017
	Sales Revenues
	Sales Revenue			$     534,000.00
	Less: Sales discounts			$         4,200.00
	Net Sales				$      529,800.00
	Cost of goods sold
	Finished goods inventory, July 1, 2016			$       96,000.00
	Cost of goods manufactured			$     386,910.00
	Cost of goods available for sale			$     482,910.00
	Less: Finished goods inventory, June 30, 2017			$       75,900.00
	Cost of goods sold				$      407,010.00
	Gross profit				$      122,790.00
(c)	Prepare the current assets section of the balance sheet at June 30, 2017.
	CLARKSON COMPANY
	(Partial) Balance Sheet
	June 30, 2017
	Assets
	Current assets
	Cash			$       32,000.00
	Accounts Receivable			$       27,000.00
	Inventories
	Finished goods	$75,900.00
	Work in process	$18,600.00
	Raw materials	$39,600.00		$     134,100.00
	Total current assets			$     193,100.00
1.

Answer 1

Note:

Errors in Raw materials purchases, sales revenue and factory depreciation will show impact on the cost of goods manufactured schedule, income statement. But no impact on balance sheet. So let’s recalculate all three one by one.

(a).

Cost of goods manufactured schedule
(For the Year Ended June 30, 2017)
Work in process inventory, July 1, 2016			$19800
Direct materials;
Raw materials inventory, July 1, 2016	$48000
Raw materials purchases	$106400
Total raw materials available for use	$154400
Less: Raw materials inventory, June 30, 2017	($39600)
Direct materials used		$114800
Direct labor		$139250
Manufacturing overhead;
Plant manager's salary	$58000
Factory utilities	$27600
Indirect labor	$24460
Factory machinery depreciation	$18000
Factory property taxes	$9600
Factory insurance	$4600
Factory repairs	$1400
Total manufacturing overhead		$143660
Total manufacturing costs			$397710
Total cost of work in process			$417510
Less: Work in process, June 30			$18600
Cost of goods manufactured			$398910

(b).

Partial Income Statement
(For the Year Ended June 30, 2017)
Sales Revenue;
Sales Revenues	$584000
Less: Sales discount	($4200)
Net sales		$579800
Cost of goods sold;
Finished goods inventory, July 1, 2016	$96000
Cost of goods manufactured	$398910
Cost of goods available for sale	$494910
Less: Finished goods inventory, June 30, 2017	($75900)
Cost of goods sold		($419010)
Gross profit		$160790

(c).

Partial Balance Sheet
(June 30, 2017)
Assets;
Current assets;
Cash		$32000
Accounts receivable		$27000
Inventories
Finished goods	$75900
Work in process	$18600
Raw materials	$39600	$134100
Total current assets		$193100