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4 April, 12:22

The following selected account balances are provided for Delray Mfg. Sales $ 1,217,000 Raw materials inventory, Dec. 31, 2016 44,000 Work in process inventory, Dec. 31, 2016 53,600 Finished goods inventory, Dec. 31, 2016 68,900 Raw materials purchases 156,900 Direct labor 237,000 Factory computer supplies used 16,300 Indirect labor 41,000 Repairs-Factory equipment 5,250 Rent cost of factory building 51,000 Advertising expense 97,000 General and administrative expenses 142,000 Raw materials inventory, Dec. 31, 2017 42,700 Work in process inventory, Dec. 31, 2017 41,000 Finished goods inventory, Dec. 31, 2017 66,400 Prepare an income statement for Delray Mfg. (a manufacturer).

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  1. 4 April, 14:37
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    Instructions are listed below

    Explanation:

    Giving the following information:

    Sales $ 1,217,000

    Raw materials inventory, Dec. 31, 2016 = 44,000

    Work in process inventory, Dec. 31, 2016 = 53,600

    Finished goods inventory, Dec. 31, 2016 = 68,900

    Raw materials purchases 156,900

    Direct labor 237,000

    Factory computer supplies used 16,300

    Indirect labor 41,000

    Repairs-Factory equipment 5,250

    Rent cost of factory building 51,000

    Advertising expense 97,000

    General and administrative expenses 142,000

    Raw materials inventory, Dec. 31, 2017 = 42,700

    Work in process inventory, Dec. 31, 2017 = 41,000

    Finished goods inventory, Dec. 31, 2017 = 66,400

    First, we need to calculate the cost of goods manufactured during the period:

    cost of goods manufactured = beginning work in process + direct materials + direct labor + manufacturing overhead - ending work in process

    Direct materials = Beginning inventory + purchases - ending inventory = 44,000 + 156,900 - 42,700 = $158,200

    Manufacturing overhead = (Factory computer supplies used + Indirect labor Repairs-Factory equipment + Rent cost of factory building) = 16300 + 41000 + 5250 + 51000 = $113,550

    cost of goods manufactured = 53600 + 158200 + 237000 + 113550 - 41000 = $521,350

    Now, we can calculate the Cost of goods sold (COGS)

    COGS = beginning finished inventory + cost of goods manufactured - ending finished inventory = 68900 + 521350 - 66400 = $523,850

    Income statement:

    Sales = 1,217,000

    COGS = 523850

    Gross income = $693150

    Advertising expense 97,000

    General and administrative expenses 142,000

    Operating income = $454,150
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