

Cash	37500
Accounts Receivable	28600
Inventory	43300
Prepaid Rent	2000
Equipment	69000
Accumulated Depreciation		20700
Accounts Payable		8800
Unearned Fees		20000
Long Term Notes payable		75000
J Noodle Capitol		31800
Sales Revenue		175500
Sales Returns and allowances	4700
Sales Discounts	6000
Cost of Goods Sold	67700
Salaries and Wages expense	25900
Depreciation expense	13800
Rent Expense	24000
Interest Expense	1600
Loss on Sale of Equipment	7700
Totals	331800	331800


1. Prepare a multistep income statement that will be used for internal reporting purposes
Note:When more than one correct account could appear in a cell, list items in order of
Largest to smallest dollar amounts. Use cell referencing to select account titles and values.
All numbers should appear as positive numbers.

2. After entering the formula in the cell B52 use the Excel
IF function to label cell A52 as either income or net loss as appropriate based on the value calculated in cell B52.

Noodles Unlimited Income statement
For the Year Ended December 31 20X1


Less:


Net Sales:

Gross Profit
Expenses:



Income from Operations
Other Expenses and Losses




3. Compute the Gross Profit Percentage.
Note: Make sure to include *100 at the end of your formula
In order to convert the decimal to a percentage

Gross Profit Percentage

tealturtle320

Old Turkey Mash is a whiskey manufactured by distilling grains and corn and then aging the mixture for five years in 50-gallon oak barrels. Distilling requires about a week and aging takes place in carefully controlled warehouses. Before it ages, the whiskey is too bitter to be consumed. Ageing mellows the brew and ultimately the consumer. The cost of the product prior to aging is $100 per barrel (direct plus indirect cost of distilling). In the aging process, each barrel must be inspected monthly and any leaks repaired. Every six months the barrels are rotated and sampled for quality. Costs of direct labor and materials in the aging process (excluding the cost of oak barrels) amount to $50 per barrel per year (all variable). As the whiskey ages, evaporation and leakage cause each 50 gallon barrel to produce only 40 gallons of bottled whiskey. New oak barrels cost $75 each and cannot be reused. After aging, they are cut in half and sold for flowerpots. The revenues generated from sales of the pots just cover the costs of disposing of the used barrels. As soon as the whiskey is aged 5 years, it is bottled and sold to wholesalers.

While domestic consumption of whiskey is falling, an aggressive international marketing campaign has opened up new international markets. The firm is in the third year of a five year campaign to double production. Because it takes 5 years to increase production (an additional barrel of mash produced today does not emerge from the aging process for 5 years), the firm is adding 100,000 gallons of distilled product each year. Prior to the expansion, 500,000 distilled gallons were produced each year. Distilled output is being increased 100,000 gallons a year for five years until it reaches 1 million gallons. Distilled output is currently 800,000 gallons and is projected to rise to 900,000 gallons next year. The accompanying table describes production, sales, and inventory in the aging process.

Base year Year 1 Year 2 Year 3

Production (distilled gallons) 500,000 600,000 700,000 800,000

Aged gallons sold 400,000 400,000 400,000 400,000

Warehouse Inventory at Beginning of Year

4year old bbls 10,000 10,000 10,000 10,000

3year old bbls 10,000 10,000 10,000 10,000

2year old bbls 10,000 10,000 10,000 12,000

1year old bbls 10,000 10,000 12,000 14,000

New bbls added 10,000 12,000 14,000 16,000

=Total bbls to be aged in year 50,000 52,000 56,000 62,000

(bbls=barrels)

Warehousing rental costs to age the base year production of 10,000 barrels per year are $1 million per year. Additional warehouse rental cost of $40,000 per year must be incurred to age each additional 20,000 barrels (100,000 distilled gallons). All costs incurred in warehousing re treated as handling or carrying costs and are written off when incurred. Bottled Old Turkey is sold to distributors for $15 per gallon. These income statements summarize the firmâs current operating function. Also add 25,000 in advertising to the income statement.

Base year Year 1 Year 2 Year 3

Revenues $6,000,000 $6,000,000 $6,000,000 $6,000,000

Less:

Cost of goods sold:

10,000 bbls @ $100/bbl 1,000,000 1,000,000 1,000,000 1,000,000

Oak barrels 750,000 900,000 1,050,000 1,200,000

Warehouse rental 1,000,000 1,040,000 1,120,000 1,240,000

Warehouse direct costs 2,500,000 2,600,000 2,800,000 3,100,000

Net Income (loss)

Before taxes $ 750,000 $ 460,000 $ 30,000 $ (540,000)

Income taxes (30%) 225,000 138,000 9,000 (162,000)

Net income after taxes $ 525,000 $ 322,000 $ 21,000 $ (378,000)

Management is quite concerned about the loss that is projected for the third year of the expansion (the current year). The president has scheduled a meeting with the local bank to review the firmâs current financial performance. This bank has been lending the firm the capital to finance the production expansion.

Required:

1. Instead of writing off all the warehousing and oak barrel costs, prepare revised income statements for years 1-3, treating the warehousing and barrel costs as product costs.

2. Which set of income statements (those given or the ones you prepared) should the president show the bank at the meeting? Justify your answer.

* Please explain how you got your answers in the revised income statements I couldnât figure it out.

peachcheetah157

Old Turkey Mash is a whiskey manufactured by distilling grains and corn and then aging the mixture for five years in 50-gallon oak barrels. Distilling requires about a week and aging takes place in carefully controlled warehouses. Before it ages, the whiskey is too bitter to be consumed. Ageing mellows the brew and ultimately the consumer. The cost of the product prior to aging is $100 per barrel (direct plus indirect cost of distilling). In the aging process, each barrel must be inspected monthly and any leaks repaired. Every six months the barrels are rotated and sampled for quality. Costs of direct labor and materials in the aging process (excluding the cost of oak barrels) amount to $50 per barrel per year (all variable). As the whiskey ages, evaporation and leakage cause each 50 gallon barrel to produce only 40 gallons of bottled whiskey. New oak barrels cost $75 each and cannot be reused. After aging, they are cut in half and sold for flowerpots. The revenues generated from sales of the pots just cover the costs of disposing of the used barrels. As soon as the whiskey is aged 5 years, it is bottled and sold to wholesalers.

While domestic consumption of whiskey is falling, an aggressive international marketing campaign has opened up new international markets. The firm is in the third year of a five year campaign to double production. Because it takes 5 years to increase production (an additional barrel of mash produced today does not emerge from the aging process for 5 years), the firm is adding 100,000 gallons of distilled product each year. Prior to the expansion, 500,000 distilled gallons were produced each year. Distilled output is being increased 100,000 gallons a year for five years until it reaches 1 million gallons. Distilled output is currently 800,000 gallons and is projected to rise to 900,000 gallons next year. The accompanying table describes production, sales, and inventory in the aging process.

Base year Year 1 Year 2 Year 3

Production (distilled gallons) 500,000 600,000 700,000 800,000

Aged gallons sold 400,000 400,000 400,000 400,000

Warehouse Inventory at Beginning of Year

4year old bbls 10,000 10,000 10,000 10,000

3year old bbls 10,000 10,000 10,000 10,000

2year old bbls 10,000 10,000 10,000 12,000

1year old bbls 10,000 10,000 12,000 14,000

New bbls added 10,000 12,000 14,000 16,000

=Total bbls to be aged in year 50,000 52,000 56,000 62,000

(bbls=barrels)

Warehousing rental costs to age the base year production of 10,000 barrels per year are $1 million per year. Additional warehouse rental cost of $40,000 per year must be incurred to age each additional 20,000 barrels (100,000 distilled gallons). All costs incurred in warehousing re treated as handling or carrying costs and are written off when incurred. Bottled Old Turkey is sold to distributors for $15 per gallon. These income statements summarize the firmâs current operating function. Also add 25,000 in advertising to the income statement.

Base year Year 1 Year 2 Year 3

Revenues $6,000,000 $6,000,000 $6,000,000 $6,000,000

Less:

Cost of goods sold:

10,000 bbls @ $100/bbl 1,000,000 1,000,000 1,000,000 1,000,000

Oak barrels 750,000 900,000 1,050,000 1,200,000

Warehouse rental 1,000,000 1,040,000 1,120,000 1,240,000

Warehouse direct costs 2,500,000 2,600,000 2,800,000 3,100,000

Net Income (loss)

Before taxes $ 750,000 $ 460,000 $ 30,000 $ (540,000)

Income taxes (30%) 225,000 138,000 9,000 (162,000)

Net income after taxes $ 525,000 $ 322,000 $ 21,000 $ (378,000)

Management is quite concerned about the loss that is projected for the third year of the expansion (the current year). The president has scheduled a meeting with the local bank to review the firmâs current financial performance. This bank has been lending the firm the capital to finance the production expansion.

Required:

1. Instead of writing off all the warehousing and oak barrel costs, prepare revised income statements for years 1-3, treating the warehousing and barrel costs as product costs.

2. Which set of income statements (those given or the ones you prepared) should the president show the bank at the meeting? Justify your answer.

* Please explain how you got your answers in the revised income statements I couldnât figure it out.

carmineporcupine472

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