Question

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of May:

1		Rainier Company	Yakima Company
2	Materials inventory, May 1	$280,000.00	$177,000.00
3	Materials inventory, May 31	(a)	175,000.00
4	Materials purchased	712,600.00	340,000.00
5	Cost of direct materials used in production	752,800.00	(a)
6	Direct labor	1,059,800.00	(b)
7	Factory overhead	326,600.00	179,400.00
8	Total manufacturing costs incurred in May	(b)	1,038,000.00
9	Total manufacturing costs	2,679,200.00	1,480,500.00
10	Work in process inventory, May 1	540,000.00	442,500.00
11	Work in process inventory, May 31	451,400.00	(c)
12	Cost of goods manufactured	(c)	1,026,500.00
13	Finished goods inventory, May 1	475,200.00	200,000.00
14	Finished goods inventory, May 31	495,600.00	(d)
15	Sales	4,142,000.00	1,679,000.00
16	Cost of goods sold	(d)	1,048,500.00
17	Gross profit	(e)	(e)
18	Operating expenses	545,000.00	(f)
19	Net income	(f)	384,100.00

	Required:
	a. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.
	b. Prepare Yakima Company’s statement of cost of goods manufactured for May. For those boxes in which you must enter subtracted or negative numbers use a minus sign*
	c. Prepare Yakima Company’s income statement for May. Enter all amounts as positive numbers.* *Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Answer 1

Rainer Company

a. Material Inventory 31 MAY= Mat Inventory 1 May+ Purchase- Cost of Material Used

=280000+712600-752800= $239800

b. Total Manufacturing Cost Incurred= Cost of direct Material ussed+Direct Labour+Factory OH

=752800+1059800+326600=$2139200

c. Cost of Goods Manufactured = Beg WIP+ total Manufacturing Cost - End. WIP

=540000+2679200-451400= $2767800

d. Cost of Goods Sold= Beg FG+ Cost of Goods Manufactured- End FG

=475200+2767800-495600= $2747400

e. Grosss Profit=Sales - COGS

=4142000-2747400= $1394600

f. Net Income = Gross Profit- Operating Expense

=$1394600-545000= $849600

Yakima Company

a. Cost of Direct mAterial Used= Beg Material+Pur- End Material

=177000+340000-175000=$342000

b. DL= Total Manufacturing Cost-Cost of Material-Factory OH

=1038000-179400-342000=516600

c. End WIP=manufacturing Cost incurred +Beg WIP - Cost of goods manufactured-

=1038000+442500-1026500=454000

d. End FG= BEG FG+Cost of Goods Manufactured- Cost of Goods Sold

=200000+1026500-1048500=178000

e. GP=Sales- COGS

=1679000-1048500=630500

f. Operating Exp= GP-Net Income

=630500-384100=246400

Yakima Company
Statement of Cost of Goods Manufactured
For the Month Ended May 31
Work in process inventory, May 1			$442,500.00
Direct materials:
Materials inventory, May 1	$177,000.00
Materials purchased	$340,000.00
Total materials available	$517,000.00
Materials inventory, May 31	-$175,000.00
Cost of direct materials used in production		$342,000.00
Direct labor		$516,600.00
Factory overhead		$179,400.00
Total manufacturing costs incurred during May			$1,038,000.00
Total manufacturing costs			$1,480,500.00
Work in process inventory, May 31			-$454,000.00
Cost of goods manufactured			$1,026,500.00

Yakima Company
Income Statement
For the Month Ended May 31
Sales		$1,679,000.00
Cost of goods sold:
Cost of goods manufactured	$1,026,500.00
Finished goods inventory, May 1	$200,000.00
Total goods available for sale	$1,226,500.00
Finished goods inventory, May 31	-$178,000.00
Cost of goods sold		$1,048,500.00
Gross profit		$630,500.00
Operating expenses		$246,400.00
Net income		$384,100.00