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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Business

Ace Frost

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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Mayra Molina · Answer 1

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