Question

Preparing Financial statements

Rockeagle Corrporation began fiscal year 2018 with the following balances in its inventory.

Raw Materirals. $30,000

Work in Process. $45,000

Finsished Goods. $14,000

During the accounting period, Rockeagle purchased 125,000 of raw materials and issued 124,000 of materials to the production department. Direct labor costs for the period amounted to 162,000, and manufacturing overhead of 24,000 was applied to work in process inventory. Assumed that there was no over or underapplied overhaed. Goods costing 306,000 to produce were completed and transferred to finished goods inventory. Good costing 301,000 we're sold for 400,000 during the period. Selling and administrative expenses amounted to 36,000.

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 statment

Answer 1

Req A:
RAW MATERIAL INVENTORY
Balance		30,000	Work in Process		124,000
Accounts payable		125,000
Balance		31,000
WORK IN PROCESS INVENTORY
Balance		45,000	Finished Goods Inventory		306,000
Raw material Inv.		124,000
Factory wages		162,000
Factory Overheads		24,000
Balance		49,000
FINISHED GOODS INVENTORY
Balance		14,000	Cost of Goods sold		301,000
work in Process		306,000
Balance		19,000
Req B:
SCHEDULE OF COST OF GOODS MANUFACTURED
PARTICULARS						AMOUNT IN $
Raw material inventory as Direct Material(Direct material consumed)						124,000
Direct wages incurred						162,000
PRIME COST						286,000
Add: Manufacturing Overheads applied						24,000
FACTORY COST INCURRED DURING THE MONTH						310,000
Add: Beginning Balance of Work in process						45,000
Less: Ending Balance of Work in process						49,000
COST OF GOODS MANUFACTURED						306,000
SCHEDULE OF COST OFGOODS SOLD
PARTICULARS						AMOUNT IN $
Cost of Goods manufactured (as computed above)						306,000
Add: Beginning inventory balance of Finished Goods						14,000
Cost of Goods available for sale						320,000
Less: Ending Inventory of Finished Goods						19,000
Cost of Goods to be sold						301,000
STATEMENT OF INCOME
PARTICULARS						AMOUNT IN $
Sales Revenue						400,000
Less: Cost of Good sold (as computed above)						301,000
Gross Margin						99,000
Less: Expenses
Selling and admin Overheads						36,000
Net Income earned during the period						63,000