Question

Line tollowing intormation applies to the questions displayed below. The following data is provided for Garcon Company and Pepper Company. Beginning finished goods inventory Beginning work in process inventory Beginning raw materials inventory (direct materials) Rental cost on factory equipment Direct labor Ending finished goods inventory Ending work in process inventory Ending raw materials inventory Factory utilities Factory supplies used (indirect materials) General and administrative expenses Indirect labor Repairs-Factory equipment Raw materials purchases Selling expenses Sales Cash Factory equipment, net Accounts receivable, net Garcon Company $ 12,000 14,500 7,250 27,000 19,000 17,650 22,000 5, 300 9,000 8,200 21,000 1,250 4,780 33,000 50,000 195,030 20,000 212,500 13,200 Pepper Company $ 16,450 19,950 9,000 22,750 35,000 13,300 16,000 7,200 12,000 3,200 43,000 7,660 1,500 52,000 46,000 290,010 15,700 115,825 19.450 Exercise 01-9 Preparing financial statements for a manufacturer LO C4, P2 Required: 1. Prepare income statements for both Garcon Company and Pepper Company. 2. Prepare the current assets section of the balance sheet for each company.

Answer 1

Cost of goods sold :

	Garcon	Pepper
Beginning raw material inventory	$7,250	$9,000
Raw material purchases	33,000	52,000
Ending raw material inventory	(5,300)	(7,200)
Raw material used	34,950	53,800
Direct labor	19,000	35,000
Factory overhead:
Rental cost on factory equipment	27,000	22,750
Factory utilities	9,000	12,000
Factory supplies used	8,200	3,200
Indirect labor	1,250	7,660
Repairs - Factory equipment	4,780	1,500
Total manufacturing cost	104,180	135,910
Beginning work in process	14,500	19,950
Ending work in process	(22,000)	(16,000)
Cost of goods manufactured	96,680	139,860
Beginning finished goods inventory	12,000	16,450
Ending finished goods inventory	(17,650)	(13,300)
Cost of goods sold	$91,030	$143,010

1.

Income Statement
	Garcon	Pepper
Sales	$195,030	$290,010
Cost of goods sold	(91,030)	(143,010)
Gross profit	104,000	147,000
Expenses:
General and administrative expenses	21,000	43,000
Selling expenses	50,000	46,000
Total expenses	71,000	89,000
Net income	$33,000	$58,000

2.

	Garcon	Pepper
Current assets:
Cash	20,000	15,700
Accounts receivable, net	13,200	19,450
Inventory:
Raw material	5,300	7,200
Work in process	22,000	16,000
Finished goods	17,650	13,300
Total current assets	$78,150	$71,650