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