Question

Zachary Corporation began fiscal year 2018 with the following balances in its inventory accounts:

Raw Materials	$	54,600
Work in Process		83,500
Finished Goods		26,100

During the accounting period, Zachary purchased $239,300 of raw materials and issued $249,600 of materials to the production department. Direct labor costs for the period amounted to $322,200, and manufacturing overhead of $48,000 was applied to Work in Process Inventory. Assume that there was no over- or underapplied overhead. Goods costing $610,900 to produce were completed and transferred to Finished Goods Inventory. Goods costing $602,000 were sold for $801,000 during the period. Selling and administrative expenses amounted to $72,000.

Required

a. Determine the ending balance of each of the three inventory accounts that would appear on the year-end balance sheet.

b. Prepare a schedule of cost of goods manufactured and sold and an income statement.

Answer 1

Raw material Inventory:
Beginning Inventory of Raw material				54600
Add: Purchases of Raw material				239300
Less: Material issued				249600
Ending Inventory of raw material				44300
Work in Process Inventory:
Beginning Inventory of Wip				83500
Add: Current cost of Manufacturing
Material				249600
labour				322200
Manufacturing OH				48000
Total Cost of Goods				703300
Less: Cost of Goods completed				610900
Ending balance of WIP				92400
Finished Goods Inventory:
Beginning Inventory of FG				26100
Add: Cost of Goods manufactured				610900
Cost of Goods available for sale				637000
Less: Cost of Goods sold				602000
Ending inventory of FG				35000
Schedule of Cost of Goods mnufactured:
Material consumed				249600
Direct labour				322200
Manufacturing OH				48000
Total current cost off manufacturing				619800
Add: Beginning Inventory of WIP				83500
Total cost of goods in mnaufacturing				703300
Less: Ending balance in WIP				92400
Cost of Goods mn]anufactured				610900
Schedule of cost of Goods sold:
Beginning Inventory fo FG				26100
Add: Cost of Goods manufactured				610900
Total Cost of Goods available for sale				637000
Less: Ending balance of FG				35000
Cost of Goods sold				602000
Income statement:
Sales revenue				801000
Less: cost of goods s old				602000
Gross margin				199000
Less: Selling and admin expense				72000
Net margin				127000