Question

The following data were taken from the records of Flexsteel Manufacturing Company for the year ended May 31, 2016.

Raw Materials		Factory Insurance	$7,000
Inventory 6/1/15	$47,000	Factory Mach-Depreciation	4,000
Raw Materials		Plant Manager’s Salary	30,000
Inventory 5/31/16	44,000	Factory Utilities	12,900
Finished Goods		Operating Expenses	100,000
Inventory 6/1/15	85,000	Sales Revenue	475,000
Finished Goods		Sales Discounts	2,500
Inventory 5/31/16	77,000	Short-term investments	5,000
Work in Process		Factory Property Taxes	6,000
Inventory 6/1/15	9,500	Factory Repairs	1,000
Work in Process		Raw Materials Purchases	67,500
Inventory 5/31/16	8,000	Cash	28,000
Direct Labor	145,000	Prepaid Expenses	2,000
Indirect Labor	18,000	Accounts Receivable	27,000

Instructions

(a) Prepare a cost of goods manufactured schedule. (Assume all raw materials used were direct materials.)

(b) Prepare an entire income statement through net income .

(c) Prepare the current asset section of the balance sheet at May 31, 2016.

Answer 1

		RAW MATERIAL ACCOUNT
			Debit	Credit
	A	Raw Materials Beginning Inventory	$47,000
	B	Raw materials Purchases	$67,500
	D=A+B-C	Raw materials used for production		$70,500
	C	Raw Materials Ending Inventory	$44,000
		Manufacturing Overheads:
	E	Indirect labor	$18,000
	F	Factory Insurance	$7,000
	G	Factory Machine -Depreciation	$4,000
	H	Plant Manager'sSalary	$30,000
	X	Factory Property taxes	$6,000
	Y	Factory repairs	$1,000
	I	Factory Utilities	$12,900
	J=E+F+G+H+I+X+Y	Total Manufacturing Overhead	$78,900
		WORK IN PROCESS INVENTORY ACCOUNT
			Debit	Credit
	K	Beginning Work in process inventory	$9,500
	D	Raw materials used for production	$70,500
	L	Direct labor costs	$145,000
	J	Total Manufacturing Overhead	$78,900
	N=K+D+L+J-M	Cost of goods manufactured		$295,900
	M	Ending Work in process inventory	$8,000
		COST OF GOODS MANUFACTURE SCHEDULE
		Raw materials used for production	$70,500
		Direct labor costs	$145,000
		Total Manufacturing Overhead	$78,900
		Decrease in work in process inventory	$1,500
		Cost of goods manufactured	$295,900
		FINISHED GOODS INVENTORY ACCOUNT
			Debit	Credit
	P	Beginning Finished goods inventory	$85,000
	N	Goods transferred from Workin process	$295,900
	Q=P+N-R	Transferred to cost of goods sold		$303,900
	R	Ending Finished goods inventory	$77,000
		INCOME STATEMENT
		Sales Revenue		$475,000
		Less:Sales Discount		$2,500
		Net Sales		$472,500
		Cost of goods sold		$303,900
		Gross Profit		$168,600
		Less: Operating expenes		$100,000
		Net Income		$68,600
		BALANCE SHEET (Part)
		As on May 31, 2016
		CURRENT ASSETS
		Cash	$28,000
		Account Receivable	$27,000
		Prepaid expenses	$2,000
		Short term investments	$5,000
		Inventory:
		Raw Materials   Inventory	$44,000
		Work in process inventory	$8,000
		Finished goods inventory	$77,000
		Total Current Assets	$191,000