Question

PR 18-5B Statement of cost of goods manufactured and income statement for a manufacturing company The following information is available for Shanika Company for 20Y6 Inventories Materials Work in process Finished goods January 1 77,350 09,200 113,750 December 31 95,550 96,200 100,100 Advertising expense Depreciation expense-office equipment Depreciation expense-factory equipment Direct labor Heat, light, and power-factory Indirect labor Materials purchased Office salaries expense Property taxes-factory Property taxes-headquarters building Rent expense-factory Sales Sales salaries expense Supplies-factory Miscellaneous costs-factory 68,250 22,750 14,560 186,550 5,850 23,660 23,500 77,350 4,095 13,650 6,825 864,500 136,500 3,250 4,420 Instructions 1. Prepare the statement of cost of goods manufactured 2. Prepare the income statement

Answer 1

Solution:
1.)

Shanika Company
Schedule of cost of goods manufactured
Particulars	Amount ($)	Amount ($)
Direct Material:
Beginning Material Inventory	$77,350
Cost of Material purchased	$123,500
Cost of Material Available	$200,850
Less: Ending material inventory	$95,550
Direct material used		$105,300
Direct labor		$186,550
Manufacturing overhead:
Depreciation expense - Factory Equipment	$14,560
Heat, light and power - factory	$5,850
Indirect labor	$23,660
Property taxes - factory	$4,095
Rent Expenses - factory	$6,825
Supplies - factory	$3,250
Miscellenous cost - factory	$4,420
Total manufacturing overhead		$62,660
Total manufacturing cost for the year		$354,510
Add: Beginning WIP		$109,200
Total cost of work in process during the year		$463,710
Less: Ending WIP		$96,200
Cost of goods manufactured		$367,510

2.)

Income Statement - Shanika Company
For the year ended Dec 31,2016
Particulars	Amount ($)	Amount ($)
Sales		$864,500
Cost of goods sold :
Cost of goods manufactured	$367,510
Add: Beginning finished goods inventory	$113,750
Less: Ending finished goods inventory	$100,100
Cost of goods sold		$381,160
Gross Profit on sales		$483,340
Operating Expenses:
Advertising Expense		$68,250
Depreciation expense - Office equipment		$22,750
Office salaries expense		$77,350
Property taxes - Head quarter building		$13,650
Sales Salaries expense
Net Income		$164,840