Question
In: Accounting
The Ningbo Fortune Company produces custom-made linens for the hospitality industry. During the month of June,...
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The Ningbo Fortune Company produces custom-made linens for the hospitality industry. During the month of June, the company purchased 11,600 bolts of spun polyester fabric at the cost of $110 per bolt. Ningbo withdrew 9,600 bolts from the storeroom during the month. Of these, 80 were used as customer samples and swatches for promotional purposes. The remaining 9,520 bolts of polyester withdrawn from the storeroom were used in the production of custom-made table and bed linens. Of the linens produced in June, 80% were completed and transferred from work in process to finished goods. Of the linens completed during the month, 25% were unsold at June 30. There were no inventories of any type on June 1. |
| Required: |
| 1. & 2. |
Determine the cost of bolts of polyester that would appear in each of the following accounts and specify whether they would appear on the balance sheet or on the income statement at June 30. Accounts Amount Financial Statement Raw Materials Work in Process Finished Goods Cost of Goods Sold Selling Expense |
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| The Ningbo Fortune Company | ||||
| Raw materials balance on June 30 | Units | Cost per unit | Total Cost | |
| Raw materials | 11,600.00 | 110.00 | 1,276,000.00 | |
| Less: Issued | 9,600.00 | 110.00 | 1,056,000.00 | |
| Raw materials balance on June 30 | 2,000.00 | 110.00 | 220,000.00 | |
| Other calculations | Units | Cost per unit | Total Cost | Remarks |
| Materials issued | 9,600.00 | 110.00 | 1,056,000.00 | |
| Less: Issued as samples | 80.00 | 110.00 | 8,800.00 | Selling Expense |
| Transferred to work in process | 9,520.00 | 110.00 | 1,047,200.00 | |
| Transferred to Finished goods | 7,616.00 | 110.00 | 837,760.00 | |
| Work in process on June 30 | 1,904.00 | 110.00 | 209,440.00 | |
| Transferred to Finished goods | 7,616.00 | 110.00 | 837,760.00 | |
| 25% were unsold at June 30 | ||||
| Finished goods on June 30 | 1,904.00 | 110.00 | 209,440.00 | |
| Cost of Goods Sold on June 30 | 5,712.00 | 110.00 | 628,320.00 | |
| Final Answer | Units | Total Cost | ||
| Raw materials balance on June 30 | 2,000.00 | 220,000.00 | ||
| Work in process on June 30 | 1,904.00 | 209,440.00 | ||
| Finished goods on June 30 | 1,904.00 | 209,440.00 | ||
| Cost of Goods Sold on June 30 | 5,712.00 | 628,320.00 | ||
| Selling Expense | 80.00 | 8,800.00 |
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