Question

Required: 1-a. Prepare income statements for both Garcon Company and Pepper Company. 1-b. Prepare the current assets section of the balance sheet for each company. Complete this question by entering your answers in the tabs below. Reg 1A Garcon Req 1A Pepper Req 1B Garcon Req 18 Pepper Prepare the income statement for Pepper Company. PEPPER COMPANY Income Statement For Year Ended December 31, 2017 $ Sales 317.5101 Gross profit Operating expenses 317,510 Selling expenses General and administrative expenses Income (loss) before tax 57.100 57,000 203,410

Answer 1

INCOME STATEMENT
	GARCON COMPANY	PEPPER COMPANY
SALES	238530	317510
LESS: COST OF GOODS SOLD	109880	166970
GROSS PROFIT	128650	150540
LESS OPERATING EXPENSES:
GENERAL AND ADMINISTRATIVE EXPENSES	24500	57000
SELLING EXPENSES	63600	57100
INCOME BEFORE TAX	40550	36440
Calculation of cost of goods sold
	GARCON COMPANY		PEPPER COMPANY
Beginning Raw materials inventory	10000		12150
Add: Raw Materials purchased	38000		65000
Less: Closing stock of Raw materials	6400		9000
Cost of raw materials used in production		41600		68150
Direct labour		21800		39800
Add: factory overhead
Rental cost on factory equipment	31250		25600
Factory utilities	10350		13500
Factory supplies used	9100		4700
Indirect labour	2000		9520
Repairs factory Equipment	6980		1750
Total factory overhead		59680		55070
Total Manufacturing cost incurred		123080		163020
Add: Beginning Work in progress		17800		22500
Total Manufacturing cost incurred in Work in process		140880		185520
Less: Ending Work in progress		24100		20200
Cost of Goods manufactured		116780		165320
Add: Beginning finished Goods		14000		17950
Cost of goods available for sale		130780		183270
Less: ending finished Goods		20900		16300
Total cost / Cost of Goods sold		109880		166970
current asset section
	GARCON COMPANY		PEPPER COMPANY
Cash		29000		23700
Account receivables		15600		22950
Add Inventories:
Ending Raw materials	6400		9000
Ending Work in process	24100		20200
Ending finished goods	20900		16300
		51400		45500
Total current assets		96000		92150