Question

The following data were taken from the records of Clarkson Company for the fiscal year ended June 30,2014.Raw MaterialsInventory 7/1/13 $48,000Factory Insurance $4,600Raw MaterialsInventory 6/30/2014 $39,600Factory MachineryDepreciation $16,000Finished GoodsInventory 7/1/13 $96,000Factory Utilities $27,600Finished GoodsInventory 6/30/14 $75,900Office Utilities Expense $8,650Work in ProgressInventory 7/1/13 $19,800Sales Revenue $534,000Work In ProgressInventory 6/30/14 $18,600Sales Discounts $4,200Direct Labor $139,250 Plant Managers Salary $58,000Indirect Labor $24,460 Factory Property Taxes $9,600Accounts Receivable $27,000 Factory Repairs $1,400Raw Materials Purchases $96,400Cash $32,000A) Prepare a cost of goods manufactured schedule (Assume all raw materials used were direct materials).B) Prepare an income statement through gross profitC)Prepare the current assets section of the balance sheet at June 30, 2014

Answer 1

Answer:

Instructions are listed below

Explanation:

A) First, we need to accommodate the information for better understanding:

Direct Materials=

Beginning Raw MaterialsInventory  $48,000

Raw Materials Purchases $96,400

Ending Materials Inventory  $39,600

Direct Labor $139,250

Manufacturing overhead=

Factory Insurance $4,600

Factory MachineryDepreciation $16,000

Office Utilities Expense $8,650

Plant Managers Salary $58,000

Indirect Labor $24,460

Factory Property Taxes $9,600

Factory Repairs $1,400

Factory Utilities $27,600

Work in ProgressInventory 7/1/13 $19,800

Work In ProgressInventory 6/30/14 $18,600

To calculate the cost of manufactured goods we need to use the following formula:

Cost of good manufactured= Beginning work in progress+ direct materials of the period + direct labor + manufactured overhead - ending work in progress

Cost of good manufactured= 19800+(48000+96400-39600)+ 139250+(4600+16000+8650+58000+24460+9600+1400+27600)-18600=$395560

B)The general structure of an income statement proceeds as follow:

Revenue/Sales (+)

Cost of Goods Sold (COGS) (-)

=Gross Profit

Marketing, Advertising, and Promotion Expenses (-)

General and Administrative (G&A) Expenses (-)

=EBITDA

Depreciation & Amortization Expense (-)

=Operating Income or EBIT

Interest (-)

Other Expenses (-)

=EBT (Pre-Tax Income)

Income Taxes (-)

=Net Income

First, we need to calculate the cost of goods sold

COGS=Beginning Inventory+Production during period−Ending Inventory=96000+395560-75900=$415660

Revenue= 534000

Sales Discounts= 4200

COGS=415660

Gross profit=$114140

C)

Assets:

Cash $32,000

Accounts Receivable $27,000

Inventories:

Ending Inventory=75900

ending work in progress=18600

Ending Materials Inventory=39600

Total current assets= $193100