Question

Required information The following information applies to the questions displayed below.] The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company. Advertising expense Depreciation expense-Office equipment Depreciation expense-Selling equipment Depreciation expense-Factory equipment Factory supervision Factory supplies used Factory utilities Inventories $34,700 Direct labor $ 676,500 254,600 59,300 10,800 69,000 937,000 26,000 25,900 79,900 37,800 4,485,700 394,200 11,000 Income taxes expense 10,500 Indirect labor 35,000 Miscellaneous production costs 128,900 Office salaries expense 8,100 Raw materials purchases 30,000 Rent expense-Office space Rent expense-Selling space Raw materials, December 31, 2016 Raw materials, December 31, 2017 Work in process, December 31, 2016 Work in process, December 31, 2017 Finished goods, December 31, 2016 Finished goods, December 31, 2017 153,200 Rent expense-Factory building 192,000 Maintenance expense-Factory equipment 19,000 Sales 21,700 Sales salaries expense 167,800 138,000 2. Prepare the company's 2017 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses

Answer 1

LEONE COMPANY
Schedule of cost of goods manufactured
For the year ended December 31, 2017
Raw materials, December 31, 2016	$     153,200
Add: Material Purchases	$     937,000
Materials available for production	$ 1,090,200
Less: Raw material, December 31, 2017	$     192,000
Materials used for production		$     898,200
Add: Direct labor		$     676,500
Add: Manufacturing overhead
Depreciation expense - Factory equipment	$        35,000
Factory supervision	$     128,900
Factory supplies used	$          8,100
Factory utilities	$        30,000
Indirect labor	$        59,300
Misc. production cost	$        10,800
Rent expense - factory building	$        79,900
Maintenance expense - Factory equipment	$        37,800
Total manufacturing overhead		$     389,800
Total manufacturing cost		$ 1,964,500
Add: Work in process inventory, December 31, 2016		$        19,000
Less: Work in process inventory, December 31, 2017		$        21,700
Cost of goods manufactured		$ 1,961,800

LEONE COMPANY
Income Statement
For the year ended December 31, 2017
Sales		$ 4,485,700
Cost of goods sold
Finished goods inventory, December 31, 2016	$     167,800
Add: Cost of goods manufactured	$ 1,961,800
Goods available for sale	$ 2,129,600
Less: Finished goods inventory, December 31, 2017	$     138,000
Cost of goods sold		$ 1,991,600
Gross profit		$ 2,494,100
Operating expenses
Selling expense
Advertising expense	$        34,700
Depreciation expense - selling equipment	$        10,500
Rent expense - selling space	$        25,900
Sales salaries expense	$     394,200
Total selling expenses	$     465,300
General and administrative expense
Depreciation expense - office equipment	$        11,000
Office salaries expense	$        69,000
Rent expense - Office space	$        26,000
Total General and administrative expense	$     106,000
Total operating expenses		$     571,300
Income before income taxes		$ 1,922,800
Income tax expenses		$     254,600
Net income		$ 1,668,200

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