Question

ersailles Manufacturing Company had the following ledger account balances at 30 June 2017.

	Balance
Finished Goods?1 July2006	$43,500
Work in Process?1 July2006	19,375
Raw Materials1? July2006	8,950
Prepaid Factory Rent	180,000
Factory Rent	72,000
Sales	3,131,500
Direct Labour	224,000
Raw Materials Purchases	412 500
Indirect Labour	83,400
Factory Supplies	16,535
Electricity and Gas	94,375
Factory Insurance	18,690
Selling & Distribution Expenses	73,000
Administrative Expenses	116,500
Machinery Depreciation	185,000
Interest Expense	14,000

Additional information relating to the company is as follows: 1. The inventories as of 30 June 2017 were:

Raw materials 11,450

Work in process 19,745

Finished goods 18,900

Expenses incurred as at the end of the year but not yet recorded are: direct labour $6,000 and administrative expenses, $3,500.

On 1 January 2017 the company paid $180,000 for the next 12 months factory rent and recorded this amount in Prepaid Factory Rent Account.

Required:

(a) Prepare costs of goods manufactured statement for 2017.

(b) Prepare income statement for the year ended 30 June 2017.

Answer 1

Schedule cost of Goods manufactured:
Beginning Inventory of WIP					19375
Material used
Beginning Inventory of material			8950
Add: Purchases			412500
Total cost of material available for sale			421450
Less: Ending inventory of material			11450
Cost of Material consumed				410000
Direct labour				230000
Mannufacturing overheads
Factory rent (90000+72000)			162000
Indirect labour			83400
factory supplies			16535
Electricity and gasa			94375
factory insurance			18690
machinery depreciation			185000	560000
Total manufacturing cost					1,200,000
Total cost of Goods manufacturing					1219375
Less: Ending inventory of WIP					19745
Cost of Goods manufactured					1199630
Income Statement:
Sales r evenue					3131500
Less: Cost of Goods sold
Beginning FG inventroy				43500
Add: Cost of Goods manufactured				1199630
Total cost of goods available for sale				1243130
Less: Ending FG inventory				18900
Cost of Good ssold					1224230
Ggross Margin					1907270
Lless: Selling and admin expense
Selling and distribution exxpense					73000
Admin expense (116500+3500)					120000
Interest expensse					14000
Net Income					1700270