Question

Incomplete manufacturing costs, expenses, and selling data for two different cases are as follows.Incomplete manufacturing costs, expenses, and sellIncomplete manufacturing costs, expenses, and sell Collapse question part(a) Indicate the missing amount for each letter.Case12Direct 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 5,000b) Prepare a condensed cost of goods manaufactures schdule ffor Case1c1) Prepare an Income statement for Case 1c2) 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

Answer:

a. Incomplete Manufacturing Costs:

                                                                 Case 1          Case 2

Direct materials used                              $9,600        $ 4,000  

Direct labor                                                5,000            8,000

Manufacturing overhead                          8,000            4,000

Total manufacturing costs                     22,600           16,000

Beginning work in process inventory      1,000             9,000

Ending work in process inventory          6,600            3,000

Sales revenue                                        24,500           31,200  

Sales discounts                                        2,500             1,400

Cost of goods manufactured                 17,000         22,000

Beginning finished goods inventory      3,000            3,300

Goods available for sale                       20,000         25,300

Cost of goods sold                                16,600         22,800

Ending finished goods in inventory       3,400            2,500

Gross profit                                             5,400           7,000

Operating expenses                              2,500            2,000

Net Income                                             2,900            5,000

b. Condensed cost of goods manufactured schedule for Case 1:

Direct materials used                $9,600

Direct labor                                  5,000

Manufacturing overhead            8,000

Total manufacturing costs       22,600

Beginning WIP inventory             1,000

Ending WIP inventory                 6,600

Cost of goods manufactured $17,000

c1. Income Statement for Case 1:

Sales Revenue, net         $22,000

Cost of goods sold             16,600

Gross profit                        $5,400

Operating expenses           2,500

Net income                      $2,900

c2. Current Assets Section of the Balance Sheet for Case 1:

Cash                                    $4,000

Receivables (net)                15,000

Inventory:

Raw materials        600

WIP                      6,600

Finished Goods  3,400      10,600

Prepaid Expenses                 400

Total current assets      $30,000

Explanation:

Using the above data to calculate the missing figures, we start from the known, applying our knowledge of the elements and formula of the income statement for a manufacturing entity.  For example, the gross profit is the difference between the net sales revenue and the cost of goods sold, and the cost of goods sold is the difference between the goods available for sale and the ending inventory of finished goods.