Question

Exercise 2-29 Schedules of Cost of Goods Manufactured and Sold; Income Statement (LO 2-1, 2-3, 2-6)

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Alexandria Aluminum Company, a manufacturer of recyclable soda cans, had the following inventory balances at the beginning and end of 20x1.

Inventory Classification	January 1, 20x1				December 31, 20x1
Raw material	$	55,000			$	70,000
Work in process		120,000				115,000
Finished goods		150,000				165,000

During 20x1, the company purchased $250,000 of raw material and spent $400,000 on direct labor. Manufacturing overhead costs were as follows:

Indirect material	$	12,000
Indirect labor		26,000
Depreciation on plant and equipment		100,000
Utilities		24,000
Other		30,000

Sales revenue was $1,105,000 for the year. Selling and administrative expenses for the year amounted to $110,000. The firm’s tax rate is 40 percent.

Exercise 2-29 Part 3

3. Prepare an income statement.

ALEXANDRIA ALUMINUM COMPANY Income Statement For the Year Ended December 31, 20x1

Answer 1

1. Schedule of Cost of Goods Manufactured:-
Alexandria Aluminum Company
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 20x1
	Particulars	$	$
	Direct Materials :
	Raw Materials inventory, January 1	55,000
	Purchases	250,000
	Cost of Materials available for use	305,000
	Raw Materials inventory, December 31	(70,000)
	Cost of Direct Materials used in production		235,000
	Direct Labor		400,000
	Factory Overheads
	Indirect material	12,000
	Indirect labor	26,000
	Depreciation on plant and equipment	100,000
	Utilities	24,000
	Other	30,000
	Total Overhead Costs		192,000
	Total manufacuring costs incurred during year		827,000
	Work in Process, January 1		120,000
	Total manufacuring costs		947,000
	Work in Process, December 31		(115,000)
	Cost of Goods manufactured		832,000
	Finished Goods inventory, January 1		$        150,000
	Goods available for sale		$        982,000
	Finished Goods inventory, December 31		$       (165,000)
	Cost of Goods sold		$       817,000
2. Income Statement:-
Alexandria Aluminum Company
Income Statement
For the Year Ended December 31, 20x1
	Revenues		$     1,105,000
	Cost of Goods sold		$     (817,000)
	Gross profit		$           288,000
	Operating expenses:
	Selling and Administrative expenses		$          (110,000)
	Income before taxes		$           178,000
	Income Taxes (40% of 178000)		$           (71,200)
	Net Income		$           106,800

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