Question

The following cost and inventory data are taken from the accounting records of Mason Company for the year just completed:

Costs incurred:
Direct labor cost	$	80,000
Purchases of raw materials	$	137,000
Manufacturing overhead	$	204,000
Advertising expense	$	49,000
Sales salaries	$	104,000
Depreciation, office equipment	$	225,000

   

	Beginning of the Year			End of the Year
Inventories:
Raw materials	$	8,200		$	10,300
Work in process	$	5,300		$	20,300
Finished goods	$	72,000		$	25,300
2. Prepare the cost of goods sold section of Mason Company’s income statement for the year.

MASON COMPANY Schedule of Cost of Goods Sold Beginning finished goods inventory Goods available for sale Cost of goods sold

Answer 1

Mason Company
Schedule of Cost of Goods Sold
Beginning Finished goods inventory	$72,000
Add: Cost of Goods Manufactured            (Refer schedule of cost of goods manufactured)	$403,900
Goods available for sale	$475,900
Deduct: Ending Finished goods inventory	$25,300
Cost of Goods Sold	$450,600

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Mason Company
Schedule of Cost of Goods Manufactured
Direct Materials:
Beginning raw materials inventory	$8,200
Add: Purchases of raw materials	$137,000
Raw materials available for use	$145,200
Deduct: Ending raw materials inventory	$10,300
Raw Materials used in Production		$134,900
Direct labor		$80,000
Manufacturing Overhead		$204,000
Total manufacturing costs         [$134,900 + $80,000 + $204,000]		$418,900
Add: Beginning Work in Process inventory		$5,300
		$424,200
Less: Ending Work in process inventory		$20,300
Cost of Goods Manufactured		$403,900