Question

The following data are from BBC Inc. accounting records at December 31, 2018.

Sales 500,000

Raw materials inventory, beginning 8,000

Raw material ending 4,000

Purchase of raw materials (To be determined)

Direct labour 30,000

Prime cost (total) 110,000

Indirect materials 20,000

Commissions 36,000

Work in process beginning inventory 8000

Work in process ending inventory 6000

Depreciation - equipment 20,000

Depreciation - factory 22,000

Finished good inventory beginning 10,000

Finished good inventory ending (To be determined)

Maintenance expense 8,000

General office salaries 86,000

Additional Info:

1) Cost of good manufactured of last year was $10 per unit

2) Maintenance expense: 80% apply to manufacturing function

3)The sale price per unit was equal to 35$ during the year

4) Assume BBC Inc. uses FIFO

5) There were 2,500 units in the ending inventory of finished goods

Question: Prepare Income Statement for Year 2018

Answer 1

Answer with working notes is given below

BBC Inc. Income Statement For the year ended December 31, 2018 Sales Less: Cost of Goods Sold Gross profit Less: Operating expenses Maintenance $1,600 Commission $36,000 General office salaries $86,000 Net profit $500,000 $161,830 As per working note below $338,170 20% of $8,000 $123,600 $214,570 working notes: BBC Inc. Schedule of Cost of Goods Manufactured Direct Material Opening inventory of Raw Material $8,000 Add: purchases $96,000 Total Raw Material Available $104,000 Less: Closing inventory of Raw Material $4,000 Raw material used in production $100,000 Less: Indirect material used $20,000 Direct material consumed Direct Labor Prime Cost Indirect material $20,000 Maintenance $6,400 Depreciation equipment $20,000 Depreciation factory $22,000 Total manufacturing cost Add: Opening work in process inventory $80,000 $30,000 $110,000 80% of $8,000 $68,400 $178,400 $8,000 $186,400 $6,000 $180,400 Less: Closing work in process inventory Cost of Goods Manufactured Raw material purchased Prime cost Direct labor Raw material consumed Add: Indirect material Add: Closing stock $110,000 $30,000 $80,000 $20,000 $4,000 $104,000 $8,000 $96,000 Less: Opening stock Purchase of raw material BBC Inc. Schedule of Cost of Goods Sold Opening Finished Goods inventory Add: Cost of Goods manufactured Cost of Goods available for sale Less: Closing Finished Goods inventory Cost of Goods sold Amount $10,000 $180,400 $190,400 $28,570 $161,830 Units 1,000 ($10,000/$10) 15,786 see working below 16,786 2,500 14,286 (500,000/$35) Sale units = Sales value /Unit selling price Closing stock Finished Goods value Cost of goods manufactured Units manufactured Cost per unit manufactured Closing stock units Closing stock FG value $180,400 15,786 $11.43 A 2,500 B $28,570 AXB Units manufactured Sales units Add: Closing stock FG units 14,286 2,500 16,786 1,000 ($10,000/$10) 15,786 Less: opening FG units Units manufactured