Question

IThe following information applies to the questions displayed below. Thefolecwing dais mioefor GrcnCompand Copany Pepper Company $ 16, 300 20,100 10,800 26,800 43,000 14,900 21,000 8,200 13,250 5,800 58,000 8,020 4,000 68,000 54,700 315,010 24,200 166,825 23,200 Garcon Company 13,900e 18, 500 7,800 29,000 23,200 18,800 23,800 7, 500 12, 750 9,100 25, 500 1,600 5,900 44,500 61,600 214,530 20,000 227,500 13,800 Beginning finished goods inventory Beginning work in process inventory Beginning raw materials inventory Rental cost on factory equipment Direct labor Ending finished goods inventory Ending work in process inventory Ending raw materials inventory Factory utilities Factory supplies used General and administrative expenses Indirect labor Repairs-Factory equipment Raw materials purchases Selling expenses Sales Cash Factory equipment, net Accounts receivable, net Required: 1-a. Prepare income statements for both Garcon Company and Pepper Company. 1-b. Prepare the current assets section of the balance sheet for each company.

Answer 1

Solution

Income statement of Garcon company and pepper company:

	Garcon company	Pepper company
Sales	214530	315010
Costs of goods sold*	116150	172870
Gross profit	98380	142140
Operating expenses:
General and administrative expenses	25500	58000
Selling expenses	61600	54700
Total operating expenses	87100	112700
Income before tax	11280	29440

* cost of good sold:

	Garcon company	Pepper company
Direct materials:
Beginning raw material inventory	7800	10800
Add: purchase of raw material	44500	68000
Deduct: ending raw material inventory	7500	8200
Direct material used in production	44800	70600
Direct labor	23200	43000
Manufacturing overhead**	58350	57870
Total manufacturing costs	126350	171470
Add: Beginning WIP inventory	18500	20100
Deduct: ending WIP inventory	23800	21000
Costs of goods manufactured for the year	121050	170570
Add: beginning finished good inventory	13900	16300
Deduct: ending finished good inventory	18800	14000
Cost of good sold	116,150	172870

** manufacturing overhead include rental cost of factory equipment, factory utilities, factory supplies used, repairs- factory equipment and indirect labor.

Garcon=29000+12750+9100+1600+5900

=58,350

Pepper=26800+13250+5800+8020+4000

=57,870

3.4

Current asset section of balance sheet for Garcon company and Pepper company:

	Garcon company	Pepper company
Cash	20,000	24,200
Account receivable, net	13,800	23,200
Inventories:
Raw materials inventory	7,500	8,200
Work in process inventory	23,800	21,000
Finished good inventory	18,800	14,000
Total current assets	83,900	90,600