In: Accounting
Newcomb Manufacturing
Company was started on January 1, Year 1, when it acquired $5,000
cash from the issue of common stock. During the first year of
operation, $1,600 of direct raw materials was purchased with cash,
and $1,200 of the materials was used to make products. Direct labor
costs of $2,000 were paid in cash. Newcomb applied $1,280 of
overhead cost to the Work in Process account. Cash payments of
$1,280 were made for actual overhead costs. The company completed
products that cost $3,200 and sold goods that had cost $2,400 for
$4,000 cash. Selling and administrative expenses of $960 were paid
in cash.
Required
Prepare T-accounts and record the events affecting Newcomb Manufacturing. Include closing entries.
Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.
1. Cost of Goods Sold -
Cost of goods sold means cost associated with the goods which are sold by the company.
Cost of goods sold includes all the cost which required to manufacture the product. After calculating all the cost which are available for sale then we have to deduct Closing stock of finished goods and adding opening balance of finished goods we will get the cost of goods sold.
Formula for Calculating Cost of Goods sold -
Solution -
1. T-Accounts -
2. Cost of Goods Sold -
3. Income Statement -
4. Balance Sheet -