Question

Question 2: Manufacturing Statement and Income Statement (20 marks in total)

Lake Ltd.’s accounting department provided following financial information:

Depreciation Expense - Factory Equipment	$ 90,000
Direct Labour	$  1,284,000
Raw Material Inventory (1st July, 2016)	$ 183,000
Raw Material Inventory (30th June, 2017)	$ 186,000
Factory Rent	$ 152,820
Finished Goods (1st July, 2016)	$ 264,000
Finished Goods (30th June, 2017)	$ 345,000
Indirect Labour	$ 75,000
Indirect Materials	$ 52,500
Sales Revenue	$  6,751,500
Administration Expenses	$ 600,000
Selling & Distribution Expenses	$  1,200,000
Purchase of Raw Material	$  1,200,360
Freight In	$ 90,000
Work in Process (1st July, 2016)	$ 60,600
Work in Process (30th June, 2017)	$ 57,330

Required: prepare a statement of Cost of Goods Manufactured and an Income Statement for Lake Ltd. for the year ended 30^th June 2017. You can prepare the statements in an Excel spreadsheet then paste into Word.

Answer 1

	Cost of Goods Manufactured Schedule
	Work in Process (1st July, 2016)		$60,600
	Direct materials:
	Raw Material Inventory (1st July, 2016)	$183,000
	Add: Raw material purchased	1200360
	Freight In	90000
	Raw material available	$1,473,360
	Less: Raw Material Inventory (30th June, 2017)	$186,000
	Raw material used	$1,287,360
	Less:Indirect material	52500
	Direct material used		$1,234,860
	Direct Labour		1284000
	Overhead:
	Indirect material used	52500
	Indirect labor	75000
	Factory Rent	$152,820
	Depreciation Expense - Factory Equipment	$90,000
	Total overhead cost		$370,320
	Total costs		$2,949,780
	Work in Process (30th June, 2017)		$57,330
	Cost of goods manufactured		$2,892,450
	Cost of Goods Sold Schedule
	Beginning finished goods		$264,000
	Cost of goods manufactured		$2,892,450
	Goods available for sale		$3,156,450
	Ending finished goods inventory		$345,000
	Cost of goods sold		$2,811,450
	Income statement
	Sales		6751500
	Less: Cost of good sold		$2,811,450
	grosss margin		$3,940,050
	Less: selling & administrative expenses
	Selling & Distribution Expenses	1200000
	Administration Expenses	$600,000	$1,800,000
	Net Income		$2,140,050

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