Question

The accounting department of the Ruthven Company provided the following data for May: sales, $72,000; marketing expenses 5%; administrative expenses 1%; other expenses 5% of all sales purchase, $36,000; factory overhead 2/3 of direct labor; direct labor, $15,000 Beginning inventories Finished goods………………………………………………………………………………... $ 7,000 Work in process………………………………………………………………………………. 8,000 Materials…………………………………………………………………………………………. 8,000 Ending inventories Finished goods………………………………………………………………………………… $ 10,200 Work in process………………………………………………………………………………. 15,000 Materials…………………………………………………………………………………………. 8,500 Required: 1) Cost of goods sold statement 2) Income statement

Answer 1

Ans. Calculation of cost goods sold statement = opening balance of inventory+purchase-closing balance of inventory

Opening balance

Finished goods                       :            7000

Work in process                      :            8000

material                                   :            8000

Purchase                                :            36000

Less: Closing balance

Finished goods                      :            (10200)

work in process                      :            (15000)

Material                                  :            (8500)

Cost of goods sold                 :            25300

                                                                             Income Statement (in $)

Sales                                                                :    72000

Cost of goods sold                                           :        25300

Gross margin                                                   :        46700

Less: Labour exp.                                            :        15000

         Factory o/h (15000X2/3)                         :        10000

        Marketing exp. (72000X.05)                     :         3600

        Admn exp.   (72000X.01)                          :         720

        other exp. (72000X.05)                            :         3600

Net margin                                                       :         13780