Question

Required information The following selected account balances are provided for Delray Mfg. Sales Raw materials inventory, Dec. 31, 2016 Work in process inventory, Dec. 31, 2016 Finished goods inventory, Dec. 31, 2016 Raw materials purchases Direct labor Factory computer supplies used Indirect labor Repairs-Factory equipment Rent cost of factory building Advertising expense General and administrative expenses Raw materials inventory, Dec. 31, 2017 Work in process inventory, Dec. 31, 2017 Finished goods inventory, Dec. 31, 2017 $ 1,297,000 36,000 50,800 67,600 164,800 221,000 19,600 44,000 5,250 57,000 104,000 139,000 44,800 42,800 68,300 Prepare an income statement for Delray Mfg. (a manufacturer),

Answer 1

Schedule of cost of goods manufactured

Direct materials
Raw materials inventory, Dec 31,2016	$36,000
Add: Raw materials purchased	$164,000
Raw materials available for use	$200,000
Less: Raw materials inventory, Dec 31, 2017	($44,800)
Direct materials used		$155,200
Direct Labour		$221,000
Factory overhead:
Factory computer supplies used	$19,600
Indirect labour	$44,000
Repairs - Factory equipment	$5,250
Rent cost of factory building	$57,000
Total Factory overhead		$125,850
Total manufacturing cost		$502,050
Add: work in process inventory, Dec 31,2016		$50,800
Total cost of work in process		$552,850
Less: Work in process inventory,Dec 31,2017		($42,800)
Cost of goods manufactured		$510,050

2. Schedule of income statement

Sales		$1,297,000
Cost of goods sold:
Finished goods inventory, Dec 31, 2016	$67,600
Cost of goods manufactured	$510,050
Cost of goods available for sale	$577,650
Less: Finished goods inventory, Dec 31, 2017	($68,300)
Cost of goods sold		$509,350
Gross profit		$787,650
Operating expenses:
Advertising expense	$104,000
Selling and administrative expense	$139,000
Total operating expenses		($243,000)
Operating income		$544,650

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