Question

Question 1: Data about Company A is given below: Direct Material Inventory, January 1, 2015 100.000 WIP Inventory, January 1, 2015 300.000 Finished Goods Inventory, January 1, 2015 200.000 Sales Revenue 6.500.000 Rent Revenue 130.000 Interest Expense 100.000 Direct Material Purchase 750.000 Utilities Expense of Manufacturing 300.000 Sales discount 25.000 Depreciation Expense of Manufacturing Plant 800.000 Repair and Maintenance Expense of Marketing Department 160.000 Indirect Labor 300.000 Utilities Expense of Marketing Department 600.000 Indirect Material 140.000 Dividend Revenue 100.000 Supplies Expense of Manufacturing Department 80.000 Sales return 15.000 Tax Expense %20 Direct Labor Expense 900.000 Direct Material Inventory, December 31, 2015 150.000 WIP Inventory, December 31, 2015 200.000 Finished Goods Inventory, December 31, 2015 300.000 Required: Prepare a Cost of Goods Manufactured/Sold Statement and an Income Statement of Company A for the year 2015

Answer 1

SCHEDULE OF COST OF GOODS MANUFACTURED/SOLD
Work in process inventory, January 1, 2015			$         300,000
Direct materials cost:
Direct material inventory, January 1, 2015	$       100,000
Add: Direct materials purchases	$       750,000
Direct materials available	$       850,000
Less: Direct material inventory, December 31, 2015	$       150,000
Direct material cost		$          700,000
Direct labor expense		$          900,000
Manufacturing overhead:
Indirect labor	$       300,000
Indirect material	$       140,000
Utilities expense of manufacturing	$       300,000
Depreciation expense of manufacturing plant	$       800,000
Supplies expense of manufacturing department	$         80,000
Total manufacturing overhead		$      1,620,000
Manufacturing cost added to WIP during the year			$     3,220,000
Total manufacturing cost			$     3,520,000
Work in process inventory, December 31, 2015			$         200,000
Cost of goods manufactured			$     3,320,000
Add: Finished goods inventory, January 1, 2015			$         200,000
Cost of goods available for sale			$     3,520,000
Less: Finished goods inventory, December 31, 2015			$         300,000
Cost of goods sold			$     3,220,000
INCOME STATEMENT
Sales revenue	$   6,500,000
Less: Sales return	$         15,000
Less: Sales discounts	$         25,000
Net sales		$      6,460,000
Cost of goods sold:		$      3,220,000
Gross profit		$      3,240,000
Less: Operating expenses:
Repair and maintenance expense of marketing department	$       160,000
Utilities expense of marketing department	$       600,000
Total operating expenses		$          760,000
Operating income		$      2,480,000
Other revenues/(expenses):
Rent revenue	$       130,000
Dividend revenue	$       100,000
Interest expense	$     (100,000)
Total other revenues/(expenses)		$          130,000
Income before taxes		$      2,350,000
Tax expense [20%]		$          470,000
Net income		$      1,880,000