Question

Use the following information for the Exercises below.

The following selected account balances are provided for Delray Mfg.

Sales	$	1,498,000
Raw materials inventory, Dec. 31, 2016		40,000
Work in process inventory, Dec. 31, 2016		51,600
Finished goods inventory, Dec. 31, 2016		67,100
Raw materials purchases		184,300
Direct labor		223,000
Factory computer supplies used		23,100
Indirect labor		50,000
Repairs—Factory equipment		5,250
Rent cost of factory building		59,000
Advertising expense		95,000
General and administrative expenses		130,000
Raw materials inventory, Dec. 31, 2017		42,500
Work in process inventory, Dec. 31, 2017		40,500
Finished goods inventory, Dec. 31, 2017		71,300

Exercise 14-14 Income statement preparation LO P2

Prepare an income statement for Delray Mfg. (a manufacturer).

Answer 1

Ans- Schedule of cost of goods manufactured for the year ended December 31,2017

Raw Material Beginning Inventory, Dec.31, 2016	$40,000
Raw material Purchases during the year	$ 184,300
Less: Raw Material Ending Inventory Dec.31,2017	($42,500)
Raw Material Consumed During the year	$181,800
Add: Direct labor	$223,000
Prime Cost	$404,800
Add: Factory Computer supplies used	$23,100
Indirect Labor	$50,000
Repairs- Factory Equipment	$5,250
Rent Cost of Factory Building	$59,000
Gross Factory Cost	$542,150
Add: Work in process inventory, Dec.31,2016	$51,600
Less: Work in process inventory, Dec. 31, 2017	($40,500)
Cost of Goods Manufactured	$553,250

Income Statement for DELRAY MFG.

DELRAY MFG.

Income Statement

For Year Ended December 31, 2017

Sales		$1,498,000
Less: Cost of Goods Sold
Finished Goods Inventory, Dec. 31, 2016	$67,100
Add: Cost of Goods Manufactured	$553,250
Cost of Goods Available for Sale	$620,350
Less: Finished Goods Inventory, Dec.31,2017	($71,300)
Cost of Goods Sold for 2017		($549,050)
Gross Profit		$948,950
Less: Operating Expenses :-
Advertising Expenses	$95,000
General and Administrative Expenses	$130,000
Total Operating Expenses		($225,000)
Operating Income		$723,950

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