Question

Rockeagle Corporation began fiscal Year 2 with the following balances in its inventory accounts.

Raw Materials	$	30,000
Work in Process		45,000
Finished Goods		14,000

During the accounting period, Rockeagle purchased $125,000 of raw materials and issued $124,000 of materials to the production department. Direct labor costs for the period amounted to $162,000, and manufacturing overhead of $24,000 was applied to Work in Process Inventory. Assume that there was no over- or underapplied overhead. Goods costing $306,000 to produce were completed and transferred to Finished Goods Inventory. Goods costing $301,000 were sold for $400,000 during the period. Selling and administrative expenses amounted to $36,000.

Required

1. Determine the ending balance of each of the three inventory accounts that would appear on the year-end balance sheet.

2. Prepare a schedule of cost of goods manufactured and sold and an income statement.

Ending Balance Raw materials Work in process Finished goods ROCKEAGLE CORPORATION Schedule of cost of goods manufactured and sold For the year ended Year 2 Raw materials available Raw materials used Total manufacturing costs Total work in process inventory Cost of goods manufactured Goods available for sale Cost of goods sold ROCKEAGLE CORPORATION Income Statement For the year ended Year 2

Answer 1

ROCKEAGLE CORPORATION Schedule of Cost of goods manufactured and sold For the year ended Year 2 $14.000 $45,000 Finished goods inventory, Work in process inventory. Direct Materials Inventory, Purchases Cost of direct materials available for use Less: Direct materails closing inventory Cost of direct matetials used in production B (A+B) $30,000 $125,000 $155,000 $31,000 $124.000 (refer working note-1) I Direct labour II $162,000 Factory overhead IT $24,000 Total Manufacturing costs I+II+III $310,000 Less: Closing work in progress $49,000 (refer working note-3) Cost of goods manufactured Cost of finished goods availble for sale Less: closing finished goods inventory Cost of goods sold $306.000 $320.000 $19.000 (refer working note-2) $301.000 ROCKEAGLE CORPORATION Income statement For the year ended Year 2 Accounts tittle Sales revenue Less : Cost of goods sold Gross profit Amount Amount $400,000 $301,000 $99,000 Less: Expenses Selling costs and administration $36,000 Total expenses $36.000 Net Income $63,000 Ending balances Raw materials Work in progress Finished goods Amount $ 31,000 (Refer working note-1) $ 49.000 (Refer working note-2) $ 19,000 (Refer working note-3)

Working Note-1 $ 124,000 Beginning Balance Purchases Raw Materials Inventory $ 30,000 Work in Process Inventory $ 125,000 Ending Balance $ 31,000 (Balance figure) $ 155,000 $ 155,000 Working Note-2 Beginning Balance Cost of Goods Completed Finished Goods Inventory $ 14,000 Cost of Goods Sold $ 306,000 Ending Balance $ $ 301,000 19,000 (Balance figure) $ 320,000 $ 320,000 Working Note-3 Work in Process Inventory $ 45,000 Ending Balance $ 124,000 Cost of goods maufactured $ 162,000 $ 24,000 $ $ Beginning Balance Direct Materials Direct Labor Applied Overhead 49,000 (Balance figure) 306,000 $ 355,000 $ 355,000