Question

Statement of Cost of Goods Manufactured and Income Statement for a Manufacturing Company

The following information is available for Shanika Company for 20Y6:

Inventories	January 1	December 31
Materials	$226,240	$278,280
Work in process	407,230	378,460
Finished goods	391,400	386,810
Advertising expense		$188,950
Depreciation expense-office equipment		26,710
Depreciation expense-factory equipment		35,900
Direct labor		428,550
Heat, light, and power-factory		14,190
Indirect labor		50,090
Materials purchased		420,200
Office salaries expense		146,650
Property taxes-factory		11,690
Property taxes-headquarters building		24,210
Rent expense-factory		19,760
Sales		1,967,440
Sales salaries expense		241,550
Supplies-factory		9,740
Miscellaneous costs-factory		6,120

Required:

1. Prepare the statement of cost of goods manufactured.

Shanika Company
Statement of Cost of Goods Manufactured
For the Year Ended December 31, 20Y6
			$
Direct materials:
	$
	$
		$
Factory overhead:
	$
Total factory overhead
Total manufacturing costs incurred
Total manufacturing costs			$
Cost of goods manufactured			$

2. Prepare the income statement.

Shanika Company
Income Statement
For the Year Ended December 31, 20Y6
			$
Cost of goods sold:
		$
		$
			$
Operating expenses:
Administrative expenses:
	$
		$
Selling expenses:
	$
Total operating expenses
			$

Answer 1

Ans. 1	SHANIKA COMPANY
	Schedule of Cost of Goods Manufactured
	For the Year Ended December 31, 20Y6
	Particulars	Amount	Amount
	Direct materials :
	Beginning raw materials inventory	$226,240
	Add: Purchase of direct materials	$420,200
	Raw materials available	$646,440
	Less: Ending raw materials inventory	-$278,280
	Direct materials used (A)		$368,160
	Direct labor (B)		$428,550
	Manufacturing overhead applied:
	Indirect labor	$50,090
	Depreciation expense - factory equipment	$35,900
	Property taxes - factory	$11,690
	Heat, light and power - factory	$14,190
	Rent expense - factory	$19,760
	Miscellaneous costs - plant	$6,120
	Supplies - factory	$9,740
	Total manufacturing overhead ©		$147,490
	Total manufacturing costs (A+B+C)		$944,200
	Add: Beginning Work in process inventory		$407,230
	Less: Ending Work in process inventory		-$378,460
	Cost of goods manufactured		$972,970
	*All manufacturing costs are listed under cost of goods manufactured statement.
Ans. 2	SHANIKA COMPANY
	Income Statement
	For the Year Ended December 31, 20Y6
	Particulars	Amount	Amount
	Sales revenue		$1,967,440
	Less: Cost of goods sold:
	Cost of Goods Manufactured	$972,970
	Add: Beginning finished goods inventory	$391,400
	Cost of goods available for sale	$1,364,370
	Less: Ending finished goods inventory	-$386,810
	Cost of goods sold		$977,560
	Gross margin		$989,880
	Less: Operating expenses:
	Administrative expenses :
	Depreciation expense - office equipment	$26,710
	Property taxes - headquarters building	$24,210
	Office salaries expense	$146,650
	Selling expenses :
	Advertising expenses	$188,950
	Sales salaries salaries	$241,550
	Total operating expenses		$628,070
	Operating Income		$361,810
	*Selling, administrative, office and general exenses are operating expenses so
	these are listed in income statement.