Question

The following information is available for The NewQuest Corporation for 2016:

Inventories	January 1	December 31
Materials	$351,000	$436,800
Work in process	631,800	592,800
Finished goods	608,400	576,000

	December 31
Advertising expense	$ 296,400
Depreciation expense-office equipment	42,120
Depreciation expense-factory equipment	56,160
Direct labor	670,800
Heat, light, and power-factory	22,460
Indirect labor	78,750
Materials purchased	659,800
Office salaries expense	185,000
Property taxes-factory	18,500
Property taxes-office building	32,400
Rent expense-factory	32,000
Sales	3,010,000
Sales salaries expense	420,000
Supplies-factory	15,400
Miscellaneous costs-factory	9,500

	Required:
A.	Prepare the 2016 statement of cost of goods manufactured.*
B.	Prepare the 2016 income statement.* * Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

Amount Descriptions

Amount Descriptions
Advertising expense
Cost of direct materials used
Cost of finished goods available for sale
Cost of goods manufactured
Cost of goods sold
Cost of materials available for use
Depreciation expense-factory equipment
Depreciation expense-office equipment
Direct labor
Finished goods inventory, December 31, 2016
Finished goods inventory, January 1, 2016
Gross profit
Heat, light, and power-factory
Indirect labor
Materials inventory, December 31, 2016
Materials inventory, January 1, 2016
Miscellaneous cost-factory
Net income
Office salaries expense
Property taxes-factory
Property taxes-office building
Purchases
Rent expense-factory
Sales
Sales salaries expense
Supplies-factory
Total manufacturing costs incurred
Total operating expenses
Work in process inventory, December 31, 2016
Work in process inventory, January 1, 2016

Statement of Cost of Goods Manufactured

A. Prepare the 2016 statement of cost of goods manufactured. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

The NewQuest Corporation

Statement of Cost of Goods Manufactured

For the Year Ended December 31, 2016

1
2	Direct materials:
3
4
5
6
7
8
9	Factory overhead:
10
11
12
13
14
15
16
17	Total factory overhead
18
19	Total manufacturing costs
20
21

Income Statement

B. Prepare the 2016 income statement. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

The NewQuest Corporation

Income Statement

For the Year Ended December 31, 2016

1
2	Cost of goods sold:
3
4
5
6
7
8
9	Operating expenses:
10	Administrative expenses:
11
12
13

Answer 1

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	Cost of Goods Manufactured:
	Finished goods inventory, beginning			608400
	Work in process inventory, beginning		631800
	Direct materials:
	Direct materials inventory, beginning	351000
	Direct materials purchases	659800
	Cost of direct materials available for use	1010800
	Direct materials inventory, ending	-436800
	Cost of direct materials placed in production	574000
	Direct labor	670800
	Depreciation expense-factory equipment	56160
	Heat, light, and power-factory	22460
	Indirect labor	78750
	Property taxes-factory	18500
	Rent expense-factory	32000
	Supplies-factory	15400
	Miscellaneous costs-factory	9500
	Total manufacturing costs		1477570
	Total work in process during period		2109370
	Work in process inventory, ending		-592800
	Cost of goods manufactured			1516570
	Cost of finished goods available for sale			2124970
	Finished goods inventory, ending			-576000
	Cost of goods sold			1548970
	Income Statement:
	Sales Revenue		3010000
	Less: Cost of Goods Sold:
	COGS	1548970
			1548970
	Gross Margin		1461030
	Less: Operating Expense
	Advertising	296400
	Depreciation - office equipment	42120
	Office salaries expense	185000
	Property taxes-office building	32400
	Sales salaries expense	420000
	Total Operating Expense		975920
	Net Income		485110