Question

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Problem 18-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1

[The following information applies to the questions displayed below.]
   

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

Advertising expense	$25,800	Direct labor	$700,000
Depreciation expense—Office equipment	11,500	Income taxes expense	278,200
Depreciation expense—Selling equipment	9,700	Indirect labor	55,300
Depreciation expense—Factory equipment	38,700	Miscellaneous production costs	10,600
Factory supervision	130,800	Office salaries expense	67,000
Factory supplies used	7,600	Raw materials purchases	952,000
Factory utilities	37,000	Rent expense—Office space	24,000
Inventories		Rent expense—Selling space	28,100
Raw materials, December 31, 2016	154,900	Rent expense—Factory building	79,300
Raw materials, December 31, 2017	177,000	Maintenance expense—Factory equipment	37,400
Work in process, December 31, 2016	15,600	Sales	4,586,000
Work in process, December 31, 2017	18,400	Sales salaries expense	390,100
Finished goods, December 31, 2016	160,600
Finished goods, December 31, 2017	138,800

Problem 18-3A Part 1

Required:
1. Prepare the company’s 2017 schedule of cost of goods manufactured.

Required information

Problem 18-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1

[The following information applies to the questions displayed below.]
   

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

Advertising expense	$25,800	Direct labor	$700,000
Depreciation expense—Office equipment	11,500	Income taxes expense	278,200
Depreciation expense—Selling equipment	9,700	Indirect labor	55,300
Depreciation expense—Factory equipment	38,700	Miscellaneous production costs	10,600
Factory supervision	130,800	Office salaries expense	67,000
Factory supplies used	7,600	Raw materials purchases	952,000
Factory utilities	37,000	Rent expense—Office space	24,000
Inventories		Rent expense—Selling space	28,100
Raw materials, December 31, 2016	154,900	Rent expense—Factory building	79,300
Raw materials, December 31, 2017	177,000	Maintenance expense—Factory equipment	37,400
Work in process, December 31, 2016	15,600	Sales	4,586,000
Work in process, December 31, 2017	18,400	Sales salaries expense	390,100
Finished goods, December 31, 2016	160,600
Finished goods, December 31, 2017	138,800

Problem 18-3A Part 2

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

Answer 1

Cost of Goods Manufactured
Beginning Inventory of Wip					15600
Add: Current cost of manufacturing
Material:
Beginning Inventory of RM			154900
Add: Purchases			952000
Total RM available			1106900
Less: Ending balance of RM			177000
Raw material consumed				929900
Direct labour				700000
Manufacturing OH incurred:
Dep-factory equip			38700
Ffactory supervision			130800
factory supplies			7600
Facotry utilities			37000
indirect labour			55300
Misc production cost			10600
Rent expense-Factory			79300
Maintenance expense			37400
Total Manufacturing OH				396700
Total current cost of manufacturing					2026600
Total cost of goods manufacturing					2042200
Less: Ending inventory of WIP					18400
Cost of goods manufactured					2023800
Income Statement:
Sales revenue				4586000
Less: Cost of goods sold
Beginning inventory of FG			160600
Add: Cost of goods manufactured			2023800
Total cost of goods available			2184400
Less: Ending inventry of FG			138800
Cost of good ssold				2045600
Gross Margin				2540400
Less: Expenses
Selling expenses
Advertising expense			25800
Depreciation-Sellling equip			9700
Rent expenses-Selling space			28100
Sales salaries expenses			390100
Total Selling expense				453700
Admin expense:
Depreciation-Office equip			11500
office salaries expenses			67000
Rent expenses-office space			24000
Total Admin expenses				102500
Net income before tax				1984200
Less: tax				278200
Net income after tax				1706000