Question

Required information

Use the following information for the Exercises below.

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The following data is provided for Garcon Company and Pepper Company.

	Garcon Company					Pepper Company
Beginning finished goods inventory		$	12,000			$	16,450
Beginning work in process inventory			14,500				19,950
Beginning raw materials inventory			7,250				9,000
Rental cost on factory equipment			27,000				22,750
Direct labor			19,000				35,000
Ending finished goods inventory			17,650				13,300
Ending work in process inventory			22,000				16,000
Ending raw materials inventory			5,300				7,200
Factory utilities			9,000				12,000
Factory supplies used			8,200				3,200
General and administrative expenses			21,000				43,000
Indirect labor			1,250				7,660
Repairs—Factory equipment			4,780				1,500
Raw materials purchases			33,000				52,000
Selling expenses			50,000				46,000
Sales			195,030				290,010
Cash			20,000				15,700
Factory equipment, net			212,500				115,825
Accounts receivable, net			13,200				19,450

Exercise 18-9 Preparing financial statements for a manufacturer LO C4, P2

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.

Complete this question by entering your answers in the tabs below.

• Req 1A Garcon
• Req 1A Pepper
• Req 1B Garcon
• Req 1B Pepper

Prepare the income statement for Garcon Company.

Prepare the income statement for Pepper Company.

Prepare the current asset section of the balance sheet for Garcon Company.

Prepare the current asset section of the balance sheet for Pepper Company.

Answer 1

Preparing Income Statement and Partial Balance Sheet for Garcon Company and Pepper Company.

Garcon Company

Income Statement

For the Year Ended

Accounts Title	Amount	Amount
Sales	$195,030
Less:- Cost of Goods Sold	(91,030)
Gross Profit		$104,000
Less:- Expenses:-
General and Administrative Expenses	21,000
Selling Expenses	50,000
Total Expenses		($71,000)
Net Income		$33,000

​​​​​Pepper Company

Income Statement

For the Year Ended

Accounts Title	Amount	Amount
Sales	$290,010
Less:- Cost of Goods Sold	(143,010)
Gross Profit		$147,000
Less:- Expenses
General and Administrative Expenses	43,000
Selling Expenses	46,000
Total Expenses		$(89,000)
Net Income		$58,000

Garcon Company

Partial Balance Sheet

For the Year Ended

Accounts Title	Amount	Amount
Assets:-
Current Assets:-
Cash	$20,000
Accounts Receivable, net	13,200
Total Current Assets		$33,200
Fixed Assets:-
Factory Equipment, net		212,500
Total Assets		$245,700

Pepper Company

Partial Balance Sheet

For the Year Ended

Accounts Title	Amount	Amount
Assets:-
Current Assets:-
Cash	$15,700
Accounts Receivable, net	19,450
Total Current Assets		$35,150
Fixed Assets:-
Factory Equipment, net		115,825
Total Assets		$150,975

Working Notes:-

Calculations for Cost of Goods Sold for Garcon Company and Pepper Company:-

Garcon Company and Pepper Company

Statement of Cost of Goods Sold

For the Year Ended

Items	Garcon Company	Pepper Company
Beginning Raw Materials Inventory	$7,250	$9,000
Add:- Raw Materials Purchases	33,000	52,000
Less:- Ending Raw Materials Inventory	(5,300)	(7,200)
Raw Material Used	$34,950	$53,800
Direct Labor	19,000	35,000
Add:- Factory Utilities	9,000	12,000
Factory Supplies Used	8,200	3,200
Indirect Labor	1,250	7,660
Repairs - Factory Equipment	4,780	1,500
Rent Cost on Factory Equipment	27,000	22,750
Total Manufacturing Costs	$104,180	$135,910
Add:- Beginning Work in Process Inventory	14,500	19,950
L​​​​​​Less:- Ending Work in Process Inventory	(22,000)	(16,000)
Cost of Goods Manufactured	$96,680	$139,860
Add:- Beginning Finished Goods Inventory	12,000	16,450
L​​​​​​Less:- Ending Finished Goods Inventory	(17,650)	(13,300)
Cost of Goods Sold	$91,030	$143,010