Question

Старе 2 2-37 Cost of goods manufactured, income statement, manufacturing company. Consider the following account balances (in thousands) for the Peterson Company: Beginning of 2017 21,000 26,000 13,000 Peterson Company Direct materials inventory Work-in-process inventory Finished-goods inventory Purchases of direct materials Direct manufacturing labor Indirect manufacturing labor Plant insurance Depreciation-plant, building, and equipment Repairs and maintenance-plant Marketing, distribution, and customer-service costs General and administrative costs End of 2017 23,000 25,000 20,000 74,000 22,000 17,000 7,000 11,000 3,000 91,000 24,000 1. Prepare a schedule for the cost of goods manufactured for 2017 2. Revenues for 2017 were $310 million. Prepare the income statement for 2017.

Answer 1

1. Preparing Schedule for Cost of Goods Manufactured for 2017:-

Peterson Company

Schedule For Cost of Goods Manufactured

For the Year 2017

(In Thousands)

Items	Amount	Amount
Direct Materials:-
Direct Materials Inventory Beginning	$21,000
Add:- Purchases of Direct Materials	74,000
Direct Materials Available for Use	$95,000
Less:- Direct Materials Inventory Ending	(23,000)
Direct Materials Used		$72,000
Add:- Direct Manufacturing Labor		22,000
Indirect Manufacturing Cost:-
Indirect Manufacturing Labor	$17,000
Plant Insurance	7,000
Depreciation - Plant, Buildings and Equipment	11,000
Repairs and Maintenance, Plant	3,000
Total Indirect Manufacturing Cost		$38,000
Total Manufacturing Cost		$132,000
Add:- Work in process Inventory Beginning		26,000
Less:- Work in process Inventory Ending		(25,000)
Cost of Goods Manufactured		$133,000

Preparing Schedule for Cost of Goods Sold for Income Statement:-

Peterson Company

Schedule For Cost of Goods Sold

For the Year 2017

(In Thousands)

Items	Amount
Cost of Goods Manufactured	$133,000
Add:- Finished Goods Inventory Beginning	$13,000
​​​​​​Cost of Goods available for sale	$146,000
Less:- Finished Goods Inventory Ending	($20,000)
Cost of Goods Sold	$126,000

2. Preparing Income Statement (in Thousands):-

Peterson Company

Income Statement

For the Year Ended 2017

(In Thousands)

Accounts	Amount	Amount
Revenues	$310,000
Less:- Cost of Goods Sold	(126,000)
Gross Profit		$184,000
Operating Expenses:-
Marketing, Distribution and Customer service costs	$91,000
General and Administrative Costs	24,000
Total Operating Expenses		$(115,000)
Operating Income		$69,000