Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

	On Company		Off Company
Materials inventory, December 1	$69,720		$90,640
Materials inventory, December 31	(a)		102,420
Materials purchased	177,090		(a)
Cost of direct materials used in production	186,850		(b)
Direct labor	262,840		203,940
Factory overhead	81,570		101,520
Total manufacturing costs incurred in December	(b)		586,440
Total manufacturing costs	665,120		665,120
Work in process inventory, December 1	133,860		218,440
Work in process inventory, December 31	112,950		(c)
Cost of goods manufactured	(c)		581,000
Finished goods inventory, December 1	117,830		101,520
Finished goods inventory, December 31	123,400		(d)
Sales	1,027,670		906,400
Cost of goods sold	(d)		586,440
Gross profit	(e)		(e)
Operating expenses	133,860		(f)
Net income	(f)		201,220

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

2. Prepare On Company's statement of cost of goods manufactured for December.

Page: On Company

	DATE	ACCOUNT CREDITED	PURCH. NO.	POST. REF.	PURCHASES DR. ACCTS. PAY. CR.
1	Statement of Cost of Goods Manufactured	For the Month Ended December 31		$	Direct materials:	1
2		$				2
3	$				$	3
4					Total manufacturing costs incurred during December	4
5		Total manufacturing costs	$			5
6		$				6
7						7
8						8
9						9
10						10
11						11
12						12
13						13

3. Prepare On Company's income statement for December.

Page: On Company

	DATE	ACCOUNT CREDITED	PURCH. NO.	POST. REF.	PURCHASES DR. ACCTS. PAY. CR.
1	Income Statement	For the Month Ended December 31		$	Cost of goods sold:	1
2		$				2
3	$					3
4		$				4
5	$					5
6						6
7						7
8						8
9						9
10						10

Answer 1

1) For On Company: For Off Company: $586,440 Materials inventory, December 1 Materials purchased Materials available for production Less: Cost of DM used in production a) Materials inventory, December 31 Cost of goods manufactured Finished goods, December 1 Cost of goods available for sales Less: Cost of goods sold d) Finished goods, December 31 $581,000 $101,520 $682,520 $586,440 $96,080 $203,940 $101,520 $280,980 $102,420 $383,400 $90,640 $292,760 $69,720 Total mfg. costs incurred in December $177,090 Less: $246,810 Direct labor -$186,850 Factory overhead $59,960 b) Cost of DM used in production Add: Materials inventory, December 31 $186,850 Materials available for production $262,840 Less: Materials inventory, December 1 $81,570 a) Materials purchased $531,260 $133,860 Total manufacturing costs $665,120 Less: Cost of goods manufactured $112,950 c) Work in process, December 31 $552,170 $117,830 $670,000 $123,400 $546,600 $1,027,670 $481,070 ($1027670 - $546600] Sales Less: Cost of goods sold e) Gross profit Less: Net income f) Operating expenses $906,400 $586,440 $319,960 $ 201,220 $118,740 Cost of DM used in production Direct labor Factory overhead b) Total mfg. costs incurred in December Add: Work in process, December 1 Total manufacturing costs Less: Work in process, December 31 c) Cost of goods manufactured Add: Finished goods, December 1 Cost of goods available for sale Less: Finished goods, December 31 d) Cost of goods sold Sales e) Gross profit $665,120 $581,000 $84,120

Less: Operating expenses f) Net income $133,860 $347,210 2) 3) $133,860 $1,027,670 On Company Statement of Cost of Goods Manufactured For the Month Ended December 31 Work in Process, December 1 Direct Materials used: Direct Materials, December 1 $69,720 Add: Purchases of direct materials $177,090 Total Direct Materials available $246,810 Less: Direct Materials, December 31 -$59,960 Direct Materials used in the production $186,850 Direct manufacturing labor $262,840 Factory overhead $81,570 Manufacturing Cost incurred during the year Total Manufacturing Costs Less: Work in Process, December 31 Cost of Goods Manufactured On Company Income Statement For the Month Ended December 31 Sales Cost of Goods Sold: Finished Goods, December 1 $117,830 Add: Cost of Goods Manufactured $552,170 Cost of Goods Available for Sale $670,000 Less: Finished Goods, December 31 $123,400 Cost of Goods Sold Gross Profit Less: Operating Expenses Net income [Ref: Part-1] -$546,600 $481,070 $133,860 $347,210 $531,260 $665,120 -$112,950 $552,170