Question

The following selected account balances are provided for Delray Mfg. Sales $ 1,234,000 Raw materials inventory, Dec. 31, 2016 37,000 Work in process inventory, Dec. 31, 2016 51,800 Finished goods inventory, Dec. 31, 2016 69,900 Raw materials purchases 180,200 Direct labor 241,000 Factory computer supplies used 16,500 Indirect labor 46,000 Repairs—Factory equipment 5,250 Rent cost of factory building 57,000 Advertising expense 97,000 General and administrative expenses 132,000 Raw materials inventory, Dec. 31, 2017 45,500 Work in process inventory, Dec. 31, 2017 47,000 Finished goods inventory, Dec. 31, 2017 74,400

Answer 1

STEP - 1 PREPARE SCHEDULE OF COST OF GOODS MANUFATCURE

Direct Materials
Raw material Inventory 12/31/16	37000
Add: Raw material Puchased	180200
Raw material available for use	217200
Less: Raw material Inventory 12/31/17	45500
Direct materials used		171700
Direct labor		241000
Factory overhead
Factory computer supplies used	16500
Indirect labor	46000
Repairs - Factory	5250
Rent - Factory	57000
Total factory overhead costs		124750
Total manufacturing costs		537450
Add: Work in process Inv   12/31/16		51800
Total cost of work in process		589250
Less: work in process inventory 12/31/17		47000
Cost of goods manufactured		542250

STEP - 2 PREPARE INCOME STATEMENT

Sales		1234000
Cost of goods sold
Finished goods Inventory 12/31/16	69900
Cost of goods manufactured	542250
Cost of goods available for sale	612150
Less : Finished goods inventory 12/31/17	74400
Cost of goods sold		537750
Gross profit		696250
Operating expenses
Advertising expenses	97000
General and administrative expenses	132000
Total operating expenses		229000
Operating Income		467250