Question

Inventory balances at the beginning and end of the year were as follows: Beginning of Year End of Year Raw materials $ 54,000 $ 34,000 Work in process ? $ 31,000 Finished goods $ 37,000 ? The total manufacturing costs for the year were $680,000; the cost of goods available for sale totaled $730,000; the unadjusted cost of goods sold totaled $662,000; and the net operating income was $30,000. The company’s underapplied or overapplied overhead is closed to Cost of Goods Sold. Required: Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

Answer 1

Schedule cost of goods manufactured
For the month ended
Particulars	Amount	Calculation
Begining Raw Materials	54,000	Given
Direct Materials, Labour & Overheard	660,000	680,000-54,000+34,000
Less: Ending Raw Materials	-34,000	Given
Total Manfucatured costs	680,000	Given
Add : Begining Work In progess	44,000	724,000-680,000
	724,000	693,000+31,000
Less :Ending Work In progess	-31,000	Given
Cost Goods Manufactured	693,000
Schedule of cost of Goods Sold
For the month ended
Cost Goods Manufactured	693,000	730,000-37,000
Add : Begining Finshed Goods	37,000	Given
Finished Goods Available for Sale	730,000	Given
Less: Ending Finshed Goods	-68,000	730,000-662,000
Unadjusted cost of goods Sold	662,000	Given
Income Statement
For the month ended
Sales	692,000	662,000+30,000
Less: Cost of Goods Sold	662,000	Given
Net operating Income	30,000	Given