Question

I just need help on the blanks under case 4, If you could show how you did it, that would be super helpful!!

Case 2 3 Direct materials 4,800 5,800 10,800 21,400 Direct labour Manufacturing overhead Total manufacturing costs Beginning work-in-process inventory Ending work-in-process inventory Cost of goods manufactured Sales Beginning finished goods inventory Cost of goods manufactured Goods available for sale Ending finished goods inventory Cost of goods sold Gross margin Operating expenses Net income 6,300 $ 7,200 6,800 20,300 4,300 4,800 19,800 31,200 2,800 19,800 22,600 7,800 $ 4,800 5,800 18,400 2,900 2,800 18,500 30,000 4,300 18,500 22,800 3,300 19,500 10,500 5,250 5,250 $ 6,800 $ 8,800 6,200 21,800 4,800 5,800 20,800 37,800 3,900 20,800 24,700 5,800 50% 18,900 10,300 8,600 $ 3,900 21,100 41,800 21,400 21,100 24,900 5,300 18,720 40% 6,680 5,800 $ $ 10,800

Answer 1

To find missing amounts in case 4

Manufacturing Account
Debit	$	Credit	S
Direct Material	4,800
Direct Labour	5,800
Manufacturing Overhead	10,800	Manufacturing cost C/F	21,400
	21,400		21,400
Manufacturing cost B/F	21,400	Ending WIP inventory	3,900
Beginning WIP inventory (Balance)	3,600	Cost of Goods Manufactured	21,100
	25,000		25,000
Finished Goods Account
Beginning Finished Goods inventory	3,800	Cost of Goods Sold (Balance)	19,600
Cost of Goods Manufactured	21,100	Ending Finished Goods inventory	5,300
	24,900		24,900
Trading Account
Cost of Goods Sold	19,600	Sales	41,800
Gross Margin (Balance)	22,200
	41,800		41,800
Profit & Loss Account
Operating Expenses (Balance)	11,400	Gross Margin	22,200
Net profit	10,800
	22,200		22,200

Working Note:

Cost of Goods Manufactured =

= Beginning WIP inventory + Total Manufacturing Cost – Ending WIP Inventory

$ 21,100 = Beginning WIP inventory + $ 21,400 – $ 3,900

Beginning WIP inventory              = 21,100 + 3,900 – 21,400

                                                                = $ 3,600

Cost of Goods Sold = Beginning Finished Goods inventory** + Cost of Goods Manufactured – Ending Finished Goods inventory

Cost of Goods Sold          = $ 3,800 + $ 21,100 - $ 5,300

                                                = $ 19,600

** Please note that Beginning Finished Goods inventory is wrongly taken as $21,400 , it should be $3,800 because

Goods available for sale                 = Beginning Finished Goods inventory + cost of goods manufactured

                                $24,900                = ?? + $ 21,100

In place of question mark above …in the information it is given 21,400 which is wrong as then above equation does not match.

So, beginning finished Goods inventory = 24,900 – 21,100 = $3,800 (shown in Red in above Accounts)

Gross Margin                     = Sales – Cost of Goods sold

                                                = $ 41,800 - $ 19,600

                                                = $ 22,200

Net Profit                            = Gross Margin – Operating Expenses

$ 10,800                               = $22,200 – Operating Expenses

So, Operating Expenses = $ 22,200 - $ 10,800

                                                = $ 11,400