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Margaret Rosenthal, accountant for Russell Manufacturing Company, prepared the following income statement for the quarter ending December 31, 2016 Sales Purchases of materials (1) $ 1,428,100 251,690 268,700 38,100 28,700 51,600 85,000 65,700 52,000 51,000 23,500 399,000 Payroll (2) Advertising Administrative travel Manufacturing utilities Facility rental (3) Depreciation (4) Sales commissions Annual insurance (manufacturing) Office utilities Management salaries (5) Net income $ 113,110 Notes (1) 80% of the materials were direct (2) 70% direct labour, 30% indirect labour (3) 80% related to manufacturing (4) 75% related to manufacturing (5) 30% related to manufacturing Furthermore Rosenthal compiled the following information with respect to inventories for the quarter (note that the company does not maintain inventories of indirect materials) Direct materials Work-in-progress Finished goods Beginning Ending $ 7,420 $ 8,740 8,620 10,000 7,750 11,8302. Prepare a cost of goods manufactured statement for the quarter. Answer is not complete Cost of Goods Manufactured Statement Direct Materials Beginning inventory Add: Purchases Deduct: Ending inventory Direct materials used $ 7,420 S 201,352 $ 8,740 $ 200,032 Direct labour $ 188,090 Overhead Indirect materials Indirect labour Facility rental Depreciation Management salaries Insurance Utilities $ 80,610 $ 68,000 s 49,275 $119,700 $ 51,000 $ 23,500 Total manufacturing costs Add: Beginning WIP inventory Deduct: Ending WIP inventory Cost of goods manufactured $ 392,08!5 $ 780,207 $ 8,620 $ 10,000 $ 778,8273. Prepare a revised income statement for the quarter Answer is not complete Russell Company Income Statement For the Quarter Ending December 31, 2016 Sales Cost of Goods Sold Beginning FG inventor Add: Cost of goods manufactured Goods available for sale Deduct: Ending FG inventory Cost of goods sold Gross margin Deduct: S & A expenses 1,428,100 $ 11,830 $ 778,827 $ 790,657 $ 7,750 $ 782,907 S 645,193 Advertising Administrative travel Facility rental Depreciation Sales commissions Management salaries Office utilities $ 38,100 $ 28,700 $ 85,000 $ 65,700 $ 52,000 S 399,000 $ 23,500 $ 692,000 Net income S (46,807)

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Answer #1

Cost of goods manufactured=Beginning work in process + manufacturing cost incurred- ending work in process

Cost of goods sold = Beginning finished goods + cost of goods manufacture- ending inventory

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