Question

The following selected account balances are provided for Delray Mfg.

Sales	$	1,272,000
Raw materials inventory, Dec. 31, 2016		35,000
Work in process inventory, Dec. 31, 2016		57,200
Finished goods inventory, Dec. 31, 2016		63,500
Raw materials purchases		184,800
Direct labor		235,000
Factory computer supplies used		15,000
Indirect labor		49,000
Repairs—Factory equipment		5,250
Rent cost of factory building		55,000
Advertising expense		102,000
General and administrative expenses		138,000
Raw materials inventory, Dec. 31, 2017		48,000
Work in process inventory, Dec. 31, 2017		44,000
Finished goods inventory, Dec. 31, 2017		72,000

Prepare an income statement for Delray Mfg. (a manufacturer).

Answer 1

Income Statement
Sales		1272000
Cost of Goods Sold:
Finished goods inventory, Dec. 31, 2016	63500
Cost of Goods manufactured	544250
Cost of Goods available for sale	607750
Less: Finished Goods Dec 31 2017	72000
Cost of Goods Sold		535750
Gross Profits		736250
Operating expenses:
Advertising expense	102000
General and administrative expenses	138000
Total Operating expense		240000
Operating Income		496250
Working for Cost of Goods manufactured
Schedule of Cost of Goods manufactured
Work in process inventory, Dec. 31, 2016			57200
Direct Material used:
Raw materials inventory, Dec. 31, 2016	35000
Raw materials purchases	184800
LESS: Raw materials inventory, Dec. 31, 2017	48000
Direct Material cost	Direct Material cost	171800
Direct labor		235000
Factory Overheads:
Factory computer supplies used	15000
Indirect labor	49000
Repairs—Factory equipment	5250
Rent cost of factory building	55000
Total Overheads		124250
Total cost to produce			531050
Cost of work in process			588250
LESS: Work in process inventory, Dec. 31, 2017			44000
Cost of Goods manufactured			544250