Question

The following information is available for The NewQuest Corporation for 2016:

Inventories	January 1	December 31
Materials	$78,650	$93,450
Work in process	108,000	96,000
Finished goods	114,750	109,800

	December 31
Advertising expense	$ 68,600
Depreciation expense-office equipment	21,250
Depreciation expense-factory equipment	14,640
Direct labor	185,050
Heat, light, and power-factory	5,250
Indirect labor	23,600
Materials purchased	124,800
Office salaries expense	76,900
Property taxes-factory	4,080
Property taxes-office building	13,250
Rent expense-factory	6,925
Sales	863,000
Sales salaries expense	137,500
Supplies-factory	3,250
Miscellaneous costs-factory	5,760

	Required:
A.	Prepare the 2016 statement of cost of goods manufactured.*
B.	Prepare the 2016 income statement.* * Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

Answer 1

A. Cost of Goods manufactured

Cost of Goods Manufactured For the year ended December 31 Beginning Raw Material 78650 Add: Purchases 124800 Less: Closing Raw Material 93450 Direct Materials used in production 110000 Direct Labor 185050 Manufacturing Overhead Depreciation expense-factory equip Heat, light, and power-factory Indirect labor Property taxes-factory Rent expense-factory Supplies-factory Miscellaneous costs-factory Manufacturing Overhead Total Manufacturing Cost 14640 5250 23,600 4,080 6,925 3250 5,760 63,505 358,555 108000 96000 Add: Beginning WIP inventory Less: Closing WIP inventory Cost of Goods Manufactured for the Year 370555 Add: Beginning Finished Goods inve 114750 Less: Closing Finished Goods invent 109800 Cost of goods sold 375505

B. Income statement

Income Statement For the year ended December 31 863000 375505 487495 Revenue Sales (A) Less: Cost of Goods sold (B) Gross Profit (C) Less: Expense Advertising expense Depreciation expense-office equi Office salaries expense Property taxes-office building Sales salaries expense Total Expenses (D) 68600 21250 76900 13250 137500 317500 Net Profit (C-D) 169995!