Question

Waterways Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial projects, and private lawns. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that performs installation and warranty servicing in six metropolitan areas.

The mission of Waterways is to manufacture quality parts that can be used for effective irrigation projects that also conserve water. By that effort, the company hopes to satisfy its customers, perform rapid and responsible service, and serve the community and the employees who represent them in each community.

The company has been growing rapidly, so management is considering new ideas to help the company continue its growth and maintain the high quality of its products.

Waterways was founded by Will Winkman who is the company president and chief executive officer (CEO). Working with him from the company’s inception is Will’s brother, Ben, whose sprinkler designs and ideas about the installation of proper systems have been a major basis of the company’s success. Ben is the vice president who oversees all aspects of design and production in the company.

The factory itself is managed by Todd Senter who hires his line managers to supervise the factory employees. The factory makes all of the parts for the irrigation systems. The purchasing department is managed by Helen Hines.

The installation and training division is overseen by vice president Henry Writer, who supervises the managers of the six local installation operations. Each of these local managers hires his or her own local service people. These service employees are trained by the home office under Henry Writer’s direction because of the uniqueness of the company’s products.

There is a small human resources department under the direction of Sally Fenton, a vice president who handles the employee paperwork, though hiring is actually performed by the separate departments. Teresa Totter is the vice president who heads the sales and marketing area; she oversees 10 well-trained salespeople.

The accounting and finance division of the company is headed by Ann Headman, who is the chief financial officer (CFO) and a company vice president; she is a member of the Institute of Management Accountants and holds a certificate in management accounting. She has a small staff of accountants, including a controller and a treasurer, and a staff of accounting input operators who maintain the financial records.

A partial list of Waterways’ accounts and their balances for the month of November follows.

Accounts Receivable		$277,000
Advertising Expenses		54,400
Cash		262,000
Depreciation—Factory Equipment		17,000
Depreciation—Office Equipment		2,400
Direct Labor		42,100
Factory Supplies Used		16,900
Factory Utilities		10,200
Finished Goods Inventory, November 30		69,100
Finished Goods Inventory, October 31		72,300
Indirect Labor		47,700
Office Supplies Expense		1,600
Other Administrative Expenses		72,400
Prepaid Expenses		41,300
Raw Materials Inventory, November 30		52,700
Raw Materials Inventory, October 31		37,900
Raw Materials Purchases		185,300
Rent—Factory Equipment		46,700
Repairs—Factory Equipment		4,500
Salaries		323,800
Sales Revenue		1,350,600
Sales Commissions		40,600
Work In Process Inventory October 31		52,800
Work In Process Inventory, November 30		42,300

A list of accounts and their values are given above. From this information, prepare a cost of goods manufactured schedule, an income statement, and a partial balance sheet for Waterways Corporation for the month of November. (List Current Assets in order of liquidity.)

Answer 1

Schedule of Cost of Goods Manufacture For Waterways Corporation for November
Particulars	Amount	Amount
Direct Material
Opening Balance	37900
+Purchases	185300
- Closing Balance	52700	170500
Direct Labour		42100
Factory Overhead
Indirect Labor	47700
Factory Supplies	16900
Factory Utilities	10200
Factory Depreciation	17000
Rent and Repairs of Factory	51200	143000
Opening WIP	52800
- Closing WIP	42300	10500
Cost of Goods Manufacture		366100

Income Statement For Waterways Corporation for November
Particulars	Amount
Sales	1350600
Other Income	40600
Total (A)	1391200
Cost of Goods Manufacture	366100
Increase/Decrease in FG Stock	3200
Personnel Cost	323800
Admin Cost	74000
Selling and Dist.	54400
Depreciation	2400
Total (B)	823900
Profit Transfer to Reserve (A)-(B)	567300

Partial Balance Sheet For Waterways Corporation for November
Particulars	Amount	Amount
Equity and Liabilities
Equity
Reserve		567300
Non Current Liabilities
Current Laiblities
Total
Assets
Non Current Assets
Current Asset
Cash		262000
Account Receivables		277000
Inventory
Raw Material	52700
WIP	42300
Finished Stock	69100	164100
Prepaid Expense		41300