Question

Incomplete manufacturing costs, expenses, and selling data for two different cases are as follows.

a. Indicate the missing amount for each letter.

Case
1 2
Direct materials used $9,600 $
Direct labor 5,000 8,000
Manufacturing overhead 8,000 4,000
Total manufacturing costs 16,000
Beginning work in process inventory 1,000
Ending work in process inventory 3,000
Sales revenue 24,500
Sales discounts 2,500 1,400
Cost of goods manufactured 17,000 22,000
Beginning finished goods inventory 3,300
Goods available for sale 20,000
Cost of goods sold
Ending finished goods inventory 3,400 2,500
Gross profit 7,000
Operating expenses 2,500
Net income 5,000

b. Prepare a condensed cost of goods manaufactures schdule ffor Case1
c. Prepare an Income statement for Case 1
d. Prepare the current assets section of the balance sheet for Case1. Assume that in Case 1 the other items in the current assets section are as follows: Cash $4,000, Receivables (net) $15,000, Raw Materials $600 and Prepaid Expenses $400.

Answer 1

Cost of goods manufactured schedule for Case1

Opening Work In Process $1,000

Add Total Manufacturing Costs $16,000

Less Ending Work In Process ($3,000)

Cost of goods manufactured $14,000

Income statement for Case 1

Sales $24,500

Less Sales discounts ($2,500)

Net Sales Revenue $22,000

Less Cost of Goods Sold

Beginning Finished Goods Inventory $3,300

Add Cost of goods manufactured $14,000

Less Ending Finished Goods Inventory ($3,400) ($13,900)

Gross Profit $8,100

Less Operating expenses ($2,500)

Net Income $2,500

Current assets section :

Inventory :

Raw Materials $600

Work In Process $3,000

Finished Goods $3,400

Receivables (net) $15,000

Prepaid Expenses $400

Cash $4,000

Total Current Assets $26,400

Step-by-step explanation:

Part b

Cost of Goods Manufactured = Opening Work In Process + Total Manufacturing Costs - Ending Work In Process

Part c

Income statement shows the Profit earned during the reporting period

Profit = Gross Profit - Operating expenses

Part d

The current assets section will include assets of a short term nature (not exceeding a period of 12 months). For a manufacturing company, it is important to show each inventory balance in the inventory categories of Raw Materials, Work In Process and Finished Goods among other items.

Note : Current Assets are shown in their order of liquidity in the Balance Sheet as above.