Question

The following selected account balances are provided for Delray Mfg.

Sales	$	1,317,000
Raw materials inventory, Dec. 31, 2016		42,000
Work in process inventory, Dec. 31, 2016		57,600
Finished goods inventory, Dec. 31, 2016		61,800
Raw materials purchases		187,900
Direct labor		229,000
Factory computer supplies used		24,500
Indirect labor		46,000
Repairs—Factory equipment		5,250
Rent cost of factory building		51,000
Advertising expense		99,000
General and administrative expenses		131,000
Raw materials inventory, Dec. 31, 2017		46,400
Work in process inventory, Dec. 31, 2017		45,300
Finished goods inventory, Dec. 31, 2017		69,400

Prepare an income statement for Delray Mfg. (a manufacturer).

Answer 1

Solution

DELRAY MFG
Income Statement
For the year ended December 31, 2017
Sales		$ 1,317,000
Cost of Goods Sold
Beginning Finished Goods Inventory	$ 61,800
Cost of goods Manufactured	$ 551,550
Goods Avalable for sale	$ 613,350
Less: Ending Finished Goods Inventory	$ 69,400
Cost of Goods Sold		$ 543,950
Gross Profit		$ 773,050
Operating Expenses
General and Administrative expenses	$ 131,000
Selling Expenses
Advertisement Expenses	$ 99,000
Total Operating expenses		$ 230,000
Net Income		$ 543,050

Working

DELRAY MFG
Cost of Goods manufactured
For the year ended December 31, 2017
Labels	Amount Descriptions	Amount Descriptions
Direct materials
Direct materials inventory, December 31, 2016	$ 42,000
Direct materials purchases	$ 187,900
Cost of direct materials available for use	$ 229,900
Direct materials inventory, December 31, 2017	$ 46,400
Cost of direct materials placed in production		$ 183,500
Direct labor		$ 229,000
Factory overhead
Indirect Labor	$ 46,000
Factory Computer supplies used	$ 24,500
Repairs—Factory equipment	$ 5,250
Rent Expenses-Factory	$ 51,000
Total Factory Overheads		$ 126,750
Total Manufacturing Cost		$ 539,250
Add: Work in process inventory, December 31, 2016		$ 57,600
Total work in process during the period		$ 596,850
Less: Work in process inventory, December 31, 2017		$ 45,300
Costs of good manufactured		$ 551,550