Question

2. The following data from the just completed year are taken from the accounting records of Mason Company:

sales	$700,000
direct labor cost	$100,000
raw material purchase	$115,000
selling expenses	$150,000
administrative expenses	$65,000
Manufacturing overhead applied to work in process	$100,000
Actual manufacturing overhead costs	$120,000

Inventories	Beginning	Ending
Raw materials	$10,000	$15,000
Work in process	$10,000	$2,000
Finished goods	$20,000	$35,000

a) Prepared a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.

b) Prepare a schedule of cost of goods sold. Assume the company’s underapplied or overapplied overhead is closed to Cost of Goods Sold.

C) Prepare an income statement

Answer 1

Requirement a

Mason company
Schedule of Cost of Goods Manufactured
Direct Material
Raw material Inventory Beginning	$        10,000.00
Raw material Purchased	$    1,15,000.00
Raw material available for use	$    1,25,000.00
Less: Raw material Inventory Ending	$        15,000.00
Direct Material Used		$     1,10,000.00
Direct labor		$     1,00,000.00
Manufacturing overheads applied		$     1,00,000.00
Total manufacturing Cost		$     3,10,000.00
Add: Work in process Beginning		$         10,000.00
Total Work in Process		$     3,20,000.00
Less: Work in progress Ending		$           2,000.00
Cost of Goods Manufactured		$     3,18,000.00

Schedule of cost of good ssold
Mason company
Schedule of cost of good sold
Beginning Finished Goods Inventory		$         20,000.00
Add: Cost of goods manufactured		$     3,18,000.00
Goods Available for sale		$     3,38,000.00
Less :Ending Finished goods Inventory		$         35,000.00
Unadjusted Cost of Goods Sold		$     3,03,000.00
Underapplied Manufacturing overheads		$         20,000.00
Adjusted cost of goods sold		$     3,23,000.00

Mason company
Income statement
Sales revenue		$     6,58,000.00
Less: Cost of goods sold		$     3,23,000.00
Gross profit		$     3,35,000.00
Selling and administrative expenses
Selling expenses	$    1,50,000.00
Administrative expenses'	$        65,000.00	$     2,15,000.00
Net income		$     1,20,000.00