Question

The following information is available for The NewQuest Corporation for 2016:

Inventories	January 1	December 31
Materials	$78,650	$93,450
Work in process	108,000	96,000
Finished goods	114,750	109,800

	December 31
Advertising expense	$ 68,600
Depreciation expense-office equipment	21,250
Depreciation expense-factory equipment	14,640
Direct labor	185,050
Heat, light, and power-factory	5,250
Indirect labor	23,600
Materials purchased	124,800
Office salaries expense	76,900
Property taxes-factory	4,080
Property taxes-office building	13,250
Rent expense-factory	6,925
Sales	863,000
Sales salaries expense	137,500
Supplies-factory	3,250
Miscellaneous costs-factory	5,760

	Required:
A.	Prepare the 2016 statement of cost of goods manufactured.*
B.	Prepare the 2016 income statement.* * Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

Amount Descriptions
Advertising expense
Cost of direct materials used
Cost of finished goods available for sale
Cost of goods manufactured
Cost of goods sold
Cost of materials available for use
Depreciation expense-factory equipment
Depreciation expense-office equipment
Direct labor
Finished goods inventory, December 31, 2016
Finished goods inventory, January 1, 2016
Gross profit
Heat, light, and power-factory
Indirect labor
Materials inventory, December 31, 2016
Materials inventory, January 1, 2016
Miscellaneous cost-factory
Net income
Office salaries expense
Property taxes-factory
Property taxes-office building
Purchases
Rent expense-factory
Sales
Sales salaries expense
Supplies-factory
Total manufacturing costs incurred
Total operating expenses
Work in process inventory, December 31, 2016
Work in process inventory, January 1, 2016

A. Prepare the 2016 statement of cost of goods manufactured. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

The NewQuest Corporation

Statement of Cost of Goods Manufactured

For the Year Ended December 31, 2016

1
2	Direct materials:
3
4
5
6
7
8
9	Factory overhead:
10
11
12
13
14
15
16
17	Total factory overhead
18
19	Total manufacturing costs
20
21

Income Statement

B. Prepare the 2016 income statement. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

The NewQuest Corporation

Income Statement

For the Year Ended December 31, 2016

1
2	Cost of goods sold:
3
4
5
6
7
8
9	Operating expenses:
10	Administrative expenses:
11
12
13
14	Selling expenses:
15
16
17
18

Answer 1

$108,000 A. Prepare the 2016 statement of cost of goods manufactured. The NewQuest Corporation Statement of Cost of Goods Manufactured For the Year Ended December 31, 2016 Work in process inventory, January 1, 2016 2 Direct materials: 3. Materials inventory, January 1, 2016 $78,650 Purchases 124,800 Cost of materials available for use 203,450 Less: Materials inventory, December 31, 2016 93,450 Cost of direct materials used 8 Direct labor 9 Factory overhead: 10 Depreciation expense-factory equipment 14,640 Heat, light, and power-factory 5,250 12 Indirect labor 23,600 13 Property taxes-factory 4,080 Rent expense-factory 6,925 15 Supplies-factory 3,250 Miscellaneous costs-factory 5,760 $110,000 185,050

63,505 17 Total factory overhead 18 Total manufacturing costs incurred 19 Total manufacturing costs 20 Less: Work in process inventory, December 31, 2016 21 Cost of goods manufactured 358,555 466,555 96,000 $370,555 B. Prepare the 2016 income statement. The NewQuest Corporation Income Statement For the Year Ended December 31, 2016 $863,000 1 Sales 2 Cost of goods sold: Finished goods inventory, January 1, 2016 Cost of goods manufactured Cost of finished goods available for sale Finished goods inventory, December 31, 2016 $114,750 370,555 485,305 109,800

375,505 487,495 7 Cost of goods sold | 8 Gross profit 9 Operating expenses: 10 Administrative expenses: 11 Depreciation expense-office equipment 12 Office salaries expense 13 Property taxes-office building 14 Selling expenses: | 15 Advertising expense 16 Sales salaries expense 17 Total operating expenses 18 Net income $21,250 76.900 13,250 111,400 68,600 137,500 206,100 317,500 $169,995