Question

The records of Bentler Shoppers, Inc. for December 2018 shows the following information:

Sales $2,050,000
Selling and administrative expenses 250,000
Direct materials purchases 205,000
Direct labor 298,000
Factory overhead 350,000
Direct materials, December 1 50,000
Work-in-process, December 1 85,000
Finished goods, December 1 64,000
Direct materials, December 31 41,000
Work-in-process, December 31 72,000
Finished goods, December 31 55,000
The net income for the month of December is:__________.

Answer 1

The net income for the month of December is: $916,000.

Step-by-step explanation:

First Prepare a Manufacturing Schedule as follows :

Note : this gives us cost of goods manufactured

$

Direct Materials ( 50,000 + 205,000 - 41,000) 214,000

Direct labor 298,000

Factory overhead 350,000

Add Opening Work-in-process Inventory 85,000

Less Closing Work-in-process Inventory (72,000)

Cost of goods manufactured 875,000

Then Prepare a Finished Goods Account as follows :

Note : This gives us the cost of goods sold

Finished Goods T - Account

$

Debit :

Opening Balance 64,000

Transfer from Manufacturing Account 875,000

Totals 939,000

Credit:

Ending Balance 55,000

Transferred to Trading Account (Balancing figure) 884,000

Totals 939,000

Lastly, Prepare the Income Statement for the Year Ended December 2018.

Note : This gives us the required Net Income

Income Statement for the Year Ended December 2018

Sales $2,050,000

Less Cost of Goods Sold ($884,000)

Gross Profit $1,166,000

Less Expenses :

Selling and administrative expenses ($250,000)

Net Income/ (Loss) $916,000