Question

The following selected account balances are provided for Delray Mfg.

Sales	$	1,265,000
Raw materials inventory, beginning		36,000
Work in process inventory, beginning		59,100
Finished goods inventory, beginning		62,100
Raw materials purchases		180,600
Direct labor		241,000
Factory supplies used (indirect materials)		19,500
Indirect labor		53,000
Repairs—Factory equipment		5,250
Rent cost of factory building		57,000
Advertising expense		94,000
General and administrative expenses		140,000
Raw materials inventory, ending		44,700
Work in process inventory, ending		45,900
Finished goods inventory, ending		68,100

Prepare an income statement for Delray Mfg. (a manufacturer).

Answer 1

INCOME STATEMENT

DELRAY MFG.
INCOME STATEMENT
FOR THE YEAR ENDED XXXX
Sales		1,265,000
Cost of Goods Sold
Finished goods inventory at the beginning	62,100
Cost of goods manufactured (see schedule)	560,850
Cost of goods available for sale	622,950
Less: Finished goods inventory at the end	(68,100)
Cost of goods sold		554,850
Gross Profit		710,150
Operating Expenses
General and administrative expenses	140,000
Advertising Expense	94,000
Total Operating Expenses		234,000
Net Income		476,150

SCHEDULE OF COST OF GOODS MANUFACTURED

DELRAY MFG.
COST OF GOODS MANUFACTURED
FOR THE YEAR ENDED XXXX
Direct Materials
Direct Materials Inventory at the beginning	36,000
Direct Material Purchase	180,600
Cost of direct materials available for use	216,600
Less: Direct materials inventory at the end	(44,700)
Cost of direct materials placed in production		171,900
Direct labor		241,000
Factory Overhead
Indirect labor	53,000
Factory supplies used	19,500
Repairs-Factory Equipment	5,250
Rent Expenses of Factory Building	57,000
Total Factory Overheads		134,750
Total Manufacturing cost		547,650
Add: Work in process inventory at the beginning		59,100
Total work in process during the period		606,750
Less: Work in process inventory at the end		(45,900)
Cost of Goods Manufactured		560,850