Question

A list of account balances for Nicholas Corporation follow: Revenue and Expenses January 1 inventories Purchases of raw materials $140,000 Raw materials $45,000 Direct labor $225,000 Work in process $30,000 Indirect labor $40,000 Finished Goods $105,000 Rent - factory $84,000 Depreciation - machinery $35,000 Insurance - factory $18,000 December 31 inventories Salesperson's salaries $72,000 Raw materials $40,000 Maintenance - machinery $12,000 Work in process $35,000 Administrative salaries $50,000 Finished goods $110,000 Miscellaneous - factory $26,000 Miscellaneous - office $40,000 Sales revenues $850,000 what is Nicholas Corporations's Net Income?

Answer 1

	Schedule for manufacturing cost
	beginning raw material	45000
Add	Purchase of raw material	140000
	Total	185000
Less	Ending Raw material	40000
	Raw material used in production		145000
	Direct labor		225000
	Manufacturing overheads
	Indirect labor cost	40000
	Rent factory	84000
	Depreciation machinery	35000
	insurance factory	18000
	Maintenance machinery	12000
	Misc. Factory	26000
	Manufacturing overheads		215000
	Total manufacturing cost		585000
Add	Beginning work in progress		30000
			615000
less	Ending work in progress		35000
	Cost of goods manufactured		580000
	Income statement
	Sales		850000
	Cost of goods sold
	Cost of goods manufactured	580000
Add	Beginning finished goods inventory	105000
	Cost of goods available for sale	685000
Less	Ending finished goods inventory	110000
	Cost of goods sold		575000
	Gross profit		275000
less	Operating expense
	Administrative expense
	Admin salaries	50000
	Misc. Office	40000
	Total adminstrative expense	90000
	Selling expense
	Sales person salaries	72000
	Total selling expense	72000
	Total operating expense		162000
	Net income		113000