Question

CHAPTER 18

ALLIED TESTING COMPANY MANUFACTURES AND SELLS THERMOMETERS THAT DETECT BODY TEMPERATURE. IT IS EXPECTING AN INCREASE IN SALES DUE TO THE CORONAVIRUS PANDEMIC. ALLIED HAS APPLIED FOR A LOAN TO FUND EXPANSION AND THE BANK IS REQUIRING FINANCIAL INFORMATION.

2020 ACTIVITY

NET REVENUE FOR THE YEAR                          $2,700,000

SELLING EXPENSES                                  $ 200,000

ADMINISTRATIVE EXPENSES                           $ 110,000

BEGINNING FINISHED GOODS INVENTORY                $   40,000

ENDING FINISHED GOODS INVENTORY                   $   60,000

BEGINNING WORK IN PROCESS INVENTORY               $ 20,000

ENDING WORK IN PROCESS INVENTORY                  $ 100,000

BEGINNING DIRECT MATERIALS                        $ 250,000

DIRECT MATERIALS PURCHASED DURING MONTH           $ 740,000

ENDING DIRECT MATERIALS                           $   80,000

DIRECT LABOR FOR THE MONTH                        $ 220,000

PLANT UTILITIES FOR THE MONTH                     $   27,000

PLANT INSURANCE FOR THE MONTH                     $   19,000

PLANT MAINTENANCE FOR THE MONTH                   $   30,000

PLANT DEPRECIATION FOR THE MONTH                  $   24,000

REQUIRED:

1.    PREPARE COST OF GOODS MANUFACTURED FOR 2020.

2.    PREPARE COST OF GOODS SOLD FOR FEBRUARY 2020.

3.    PREPARE INCOME STATEMENT FOR 2020.

   CHAPTER 18

   ALLIED TESTING COMPANY MANUFACTURES AND SELLS THERMOMETERS THAT DETECT BODY TEMPERATURE. IT IS EXPECTING AN INCREASE IN SALES DUE TO THE CORONAVIRUS PANDEMIC. ALLIED HAS APPLIED FOR A LOAN TO FUND EXPANSION AND THE BANK IS REQUIRING FINANCIAL INFORMATION.

   2020 ACTIVITY

   NET REVENUE FOR THE YEAR                          $2,700,000

   SELLING EXPENSES                                  $ 200,000

   ADMINISTRATIVE EXPENSES                           $ 110,000

   BEGINNING FINISHED GOODS INVENTORY                $   40,000

   ENDING FINISHED GOODS INVENTORY                   $   60,000

   BEGINNING WORK IN PROCESS INVENTORY               $ 20,000

   ENDING WORK IN PROCESS INVENTORY                  $ 100,000

   BEGINNING DIRECT MATERIALS                        $ 250,000

   DIRECT MATERIALS PURCHASED DURING MONTH           $ 740,000

   ENDING DIRECT MATERIALS                           $   80,000

   DIRECT LABOR FOR THE MONTH                        $ 220,000

   PLANT UTILITIES FOR THE MONTH                     $   27,000

   PLANT INSURANCE FOR THE MONTH                     $   19,000

   PLANT MAINTENANCE FOR THE MONTH                   $   30,000

   PLANT DEPRECIATION FOR THE MONTH                  $   24,000

   REQUIRED:

4.    PREPARE COST OF GOODS MANUFACTURED FOR 2020.
5.    PREPARE COST OF GOODS SOLD FOR FEBRUARY 2020.
6.    PREPARE INCOME STATEMENT FOR 2020.

Answer 1

PART 1: COST OF GOODS MANUFACTURED FOR 2020

PART 2: COST OF GOODS SOLD FOR 2020

PARTICULARS	$
Cost of Goods Manufactured	1150000
Add: Beginning Finished goods	40000
Goods available for sale	1190000
Less: Ending Finished goods	(60000)
Cost of Goods sold	1130000

PART 3: INCOME STATEMENT FOR 2020

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