Question

​​​​​​Zachary Corporation began fiscal Year 2 with the following balances in its inventory accounts.

Raw Materials	$	54,700
Work in Process		82,400
Finished Goods		26,700

During the accounting period, Zachary purchased $238,400 of raw materials and issued $249,400 of materials to the production department. Direct labor costs for the period amounted to $322,900, and manufacturing overhead of $47,900 was applied to Work in Process Inventory. Assume that there was no over- or underapplied overhead. Goods costing $611,500 to produce were completed and transferred to Finished Goods Inventory. Goods costing $602,000 were sold for $801,800 during the period. Selling and administrative expenses amounted to $70,300.

1. Determine the ending balance of each of the three inventory accounts that would appear on the year-end balance sheet.

2. Prepare a schedule of cost of goods manufactured and sold and an income statement.

Answer 1

	Raw material inventory ending:
	Beginning Inventoy of RM	54700
	Add: Purchaase	238400
	Less: Issued	-249400
	Ending inventory of Raw material	43700
	Work in process Ending inventory:
	Beginning inventory of WIP			82400
	Add: Current cost
	Material issued		249400
	Labor cost		322900
	Overheads applied		47900	620200
	Total cost of goods manufacturing			702600
	Less: Goods completed			611500
	Ending inventory of Wip			91100
	Finished goods Ending inventory:
	Beginning inventory of FG		26700
	Add: Cost of goods manufactured		611500
	Total goods available for sale		638200
	Less: Cost of goods sold		-602000
	Ending invenotry of Fg		36200
	Schedule of Cost of goods manufactured:
	beginning inventory of RM		54700
	add: purchases		238400
	raw material available		293100
	Less: Ending inventory of RM		-43700
	Raw material issued		249400
	labour cost		322900
	OH applied		47900
	Total manufacturing cost		620200
	add: beginning work in progress		82400
	total work in progress inventory		702600
	Less: Ending inventory of WIP		-91100
	cost of goods manufactured		611500
	add: beginning inventory of FG		26700
	Total cost of goods available for sale		638200
	less: ending inventory of FG		-36200
	cost of goods sold		602000
	Income Statement
	Sales revenue			801800
	less:Cost of goods sold			-602000
	Gross Margin			199800
	less:Selling and admin expense			-70300
	Net Income			129500