Question

Question 1

The following information pertains to the Satyam Company for the year ending December 31, 2019.

	$	Hours
Revenue	35,000
Interest payable	2300
Purchases of direct materials	14,000
Wages [factory]	5500
Beginning direct material	2850
Indirect Materials	5,000
Supplies expense [factory]	3,500
Supplies [factory]	9540
Depreciation of factory machines	3500
Depreciation of factory Plant	2300
Depreciation of shop	2,000
Unearned revenue	5620
Selling commission	2200
Marketing costs	4200
Wages [Store]	6,000
Insurance expense [shop]	2300
Prepaid insurance Expense [store]	1450
Supplies expense [store]	5,000
Utilities [store]	2,500
Direct Labor Hours		2800
Hourly Rate for direct labour	16
Direct materials inventory Dec 31 2019	4,000
Work in process Jan 1 2019	3,000
Sales Return/ allowances	2100
Rent revenue	5,000
Work in process Dec 31 2019	5,000
Sales Discounts	3,000
Finished Goods Inventory Jan 1 2019	3,000
Finished Goods Inventory Dec 31 2019	2500

REQUIRED

1. Prepare a COGM statement for year end

2. Prepare an income statement [ assume interest tax rate to be 17%] for year end

Answer 1

In the books of Satyam company

1. Cost of Goods Manufactured (COGM) statement for the year ended 31.12.2019

	Particulars	Amount($)	Amount($)
A	Direct Material consumed:
	Beginning direct material as on 01.01.2019	2850
	+ Direct material purchased during the period	14000
	- Direct material inventory as on 31.12.2019	(4000)
	Raw material used in production/consumed		12850
B	Direct Labor
	Wages (Factory)	5500
	+ Direct labor expenses (2800*16)	44800	50300
C	Direct Expenses		0
D	Prime cost (A+B+C)		63150
E	Fatory Overheads
	Indirect Material	5000
	Indirect labor	0
	Supplies Expense (Factory)	3500
	Supplies (Factory)	9540
	Depreciation on Factory Machines	3500
	Depreciation on Factory Plant	2300	23840
F	Total Manufacturing Cost (D+E)		86990
	+ Beginning Work in process inventory	3000
	-Closing Work in process	(5000)
F	Cost of good manufactured		84990

2. Income Statement for the year ended 31.12.2019

	Particulars	Amount($)	Amount($)
	Revenue:
	Sales Revenue	35000
	- Sales Discounts	(3000)
	- Sales Returns/Allowances	(2100)
A	Total Revenue		29900
B	Cost of goods sold (Working Note1)		(85490)
	Gross Loss (A-B)		(55590)
C	Operating Expenses :
	Selling Commission	2200
	Marketing costs	4200
	Deprecition of shop	2000
	Wages (Store)	6000
	Insurance Expense (Shop)	2300
	Supplies (Store)	5000
	Utilities (Store)	2500
			(24200)
D	Net income (loss) from Operations		(79790)
E	Other Income / expense
	Rent Revenue	5000
	Interest expense	(2300)	2700
	Income before tax (D-E)/Net loss		(77090)

Working Note - 1

Particulars	Amount($)	Amount($)
Cost of good manufactured		84990
+Opening Finished goods inventory		3000
- Closing Finished goods inventory		(2500)
Cost of goods sold		85490