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Problem 14-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1

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The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.
   

Advertising expense	$	26,500		Direct labor	$	675,700
Depreciation expense—Office equipment		11,100		Income taxes expense		297,800
Depreciation expense—Selling equipment		10,700		Indirect labor		56,900
Depreciation expense—Factory equipment		35,800		Miscellaneous production costs		10,400
Factory supervision		126,600		Office salaries expense		69,000
Factory supplies used		7,800		Raw materials purchases		937,000
Factory utilities		43,000		Rent expense—Office space		21,000
Inventories				Rent expense—Selling space		27,900
Raw materials, December 31, 2016		164,100		Rent expense—Factory building		81,200
Raw materials, December 31, 2017		189,000		Maintenance expense—Factory equipment		37,400
Work in process, December 31, 2016		17,900		Sales		4,565,700
Work in process, December 31, 2017		22,900		Sales salaries expense		399,500
Finished goods, December 31, 2016		167,900
Finished goods, December 31, 2017		136,200

Problem 14-3A Part 2

2. Prepare the company’s 2017 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.

	LEONE COMPANY Income Statement For Year Ended December 31, 2017 Sales Cost of goods sold Goods available for sale 0 Cost of goods sold 0 0 Operating expenses Selling expenses Total selling expenses 0 General and administrative expenses Total general and administrative expenses 0 Total operating expenses 0 Income before taxes 0 Net income $0

Answer 1

	Schedule of cost of goods manufactured
	Direct materials
	Raw materials inventory,December 31,2016						164,100
	Raw materials purchase						937,000
	Raw materials available for use						1,101,100
	less:Raw materials inventory,Decemenr 31,2017						189,000
	Direct materials used							912,100
	Direct labor							675,700
	Factory overhead
	Depreciation expense-factory equipment						35,800
	Factory supervision						126,600
	Factory supplies used						7,800
	Factory utilities						43,000
	Rent expense-factory building						81,200
	maintenance expense-factory equipment						37,400
	miscellaneous production costs						10,400
	indirect labor						56,900
	total factory overhead costs							399,100
	total manufacturing costs							1,986,900
	add:work in process inventory,december 31,2016							17,900
	total cost of work in procese							2,004,800
	less:work in process inventory,December 31,2017							22,900
	cost of goods manufactured							1,981,900
	Income Statement
	Sales							4,565,700
	Cost of goods sold
	cost of goods manufactured						1,981,900
	Finished goods inventory,December 31,2016						167,900
	goods available for sale						2,149,800
	less:finished goods inventory,december 31,2017						136,200
	Cost of goods sold							2,013,600
	Gross profit from sales							2,552,100
	operating expense
	Selling expense
	Depreciation expense -Selling equipment						10,700
	Rent expense -selling space						27,900
	Sales salaries expense						399,500
	Advertising expense						26,500
	Total selling expense							464,600
	General and administrative expense
	Depreciation expense-office equipment						11,100
	office salaries expense						69,000
	Rent expense-office space						21,000
	total general and administrative expene							101,100
	total operating expense							565,700
	income before taxes							1,986,400
	income taxes expense							297,800
	net income							1,688,600