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Statement of cost of goods manufactured and income statement for a manufacturing company

Instructions

Amount Descriptions

Statement of Cost of Goods Manufactured

Income Statement

X

Instructions

The following information is available for The NewQuest Corporation for 2016:

Inventories January 1 December 31
Materials $347,000 $435,000
Work in process 627,000 590,600
Finished goods 608,200 571,000
December 31
Advertising expense $ 295,200
Depreciation expense-office equipment 44,400
Depreciation expense-factory equipment 55,000
Direct labor 669,600
Heat, light, and power-factory 22,480
Indirect labor 76,750
Materials purchased 658,600
Office salaries expense 185,300
Property taxes-factory 18,200
Property taxes-office building 32,400
Rent expense-factory 32,500
Sales 3,016,000
Sales salaries expense 419,000
Supplies-factory 15,900
Miscellaneous costs-factory 9,600
Required:
A. Prepare the 2016 statement of cost of goods manufactured.*
B. Prepare the 2016 income statement.*
* Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries. “Less” or “Plus” will automatically appear if it is required. Enter all amounts as positive numbers.

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Irving Heathcote
Irving HeathcoteLv2
28 Sep 2019

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Problem 18-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1

[The following information applies to the questions displayed below.]

The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.

Advertising expense $ 34,300 Direct labor $ 674,200
Depreciation expense—Office equipment 9,800 Income taxes expense 289,900
Depreciation expense—Selling equipment 9,800 Indirect labor 56,000
Depreciation expense—Factory equipment 35,300 Miscellaneous production costs 10,900
Factory supervision 131,500 Office salaries expense 74,000
Factory supplies used 8,400 Raw materials purchases 930,000
Factory utilities 40,000 Rent expense—Office space 25,000
Inventories Rent expense—Selling space 29,200
Raw materials, December 31, 2016 167,600 Rent expense—Factory building 82,400
Raw materials, December 31, 2017 185,000 Maintenance expense—Factory equipment 38,400
Work in process, December 31, 2016 17,000 Sales 4,466,700
Work in process, December 31, 2017 23,200 Sales salaries expense 396,600
Finished goods, December 31, 2016 162,900
Finished goods, December 31, 2017 141,200

Problem 18-3A Part 2

2. Prepare the company’s 2017 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.

Budgeted Income Statement and Balance Sheet

As a preliminary to requesting budget estimates of sales, costs,and expenses for the fiscal year beginning January 1, 2017, thefollowing tentative trial balance as of December 31, 2016, isprepared by the Accounting Department of Webster PublishingCo.:

Cash $102,200
Accounts Receivable 175,800
Finished Goods 36,900
Work in Process 24,600
Materials 40,400
Prepaid Expenses 3,000
Plant and Equipment 454,800
Accumulated Depreciation—Plant and Equipment $195,600
Accounts Payable 113,900
Common Stock, $10 par 350,000
Retained Earnings 178,200
$837,700 $837,700

Factory output and sales for 2017 are expected to total 23,000units of product, which are to be sold at $110 per unit. Thequantities and costs of the inventories at December 31, 2017, areexpected to remain unchanged from the balances at the beginning ofthe year.

Budget estimates of manufacturing costs and operating expensesfor the year are summarized as follows:

Estimated Costs and Expenses
Fixed
(Total for Year)		 Variable
(Per Unit Sold)
Cost of goods manufactured and sold:
Direct materials _ $28
Direct labor _ 8.5
Factory overhead:
Depreciation of plant and equipment $23,000 _
Other factory overhead 7,100 5
Selling expenses:
Sales salaries and commissions 82,600 14
Advertising 69,000 _
Miscellaneous selling expense 6,000 2
Administrative expenses:
Office and officers salaries 54,300 7
Supplies 2,800 1
Miscellaneous administrative expense 1,400 1.5

Balances of accounts receivable, prepaid expenses, and accountspayable at the end of the year are not expected to differsignificantly from the beginning balances. Federal income tax of$222,800 on 2017 taxable income will be paid during 2017. Regularquarterly cash dividends of $1 per share are expected to bedeclared and paid in March, June, September, and December on 35,000shares of common stock outstanding. It is anticipated that fixedassets will be purchased for $123,000 cash in May.

Required:

Prepare a budgeted income statement for 2017.

Prepare a budgeted balance sheet as of December 31, 2017.

1. Prepare a budgeted income statement for2017.

Webster Publishing Co.
Budgeted Income Statement
For the Year Ending December 31, 2017
$
Cost of goods sold:
$
Cost of goods sold
Gross profit $
Operating expenses:
Selling expenses:
$
Total selling expenses $
Administrative expenses:
$
Total administrative expenses
Total operating expenses
Income before income tax $

$

2. Prepare a budgeted balance sheet as ofDecember 31, 2017.

Webster Publishing Co.
Budgeted Balance Sheet
December 31, 2017
Assets
Current assets:
Inventories:
Total current assets
Property, plant, and equipment:
Total assets
Liabilities
Current liabilities:
Stockholders' Equity
Total stockholders’ equity
Total liabilities and stockholders’ equity

Budgeted Income Statement and Balance Sheet

As a preliminary to requesting budget estimates of sales, costs,and expenses for the fiscal year beginning January 1, 2017, thefollowing tentative trial balance as of December 31, 2016, isprepared by the Accounting Department of Mesa Publishing Co.:

Cash

$ 26,000

Accounts Receivable

23,800

Finished Goods

16,900

Work in Process

4,200

Materials

6,400

Prepaid Expenses

600

Plant and Equipment

82,000

Accumulated Depreciation—Plant and Equipment

$ 32,000

Accounts Payable

14,800

Common Stock, $1.50 par

30,000

Retained Earnings

83,100

$159,900

$159,900

Factory output and sales for 2017 are expected to total 3,800units of product, which are to be sold at $120 per unit. Thequantities and costs of the inventories at December 31, 2017, areexpected to remain unchanged from the balances at the beginning ofthe year.

Budget estimates of manufacturing costs and operating expensesfor the year are summarized as follows:

Estimated Costs and Expenses

Fixed
(Total for Year)

Variable
(Per Unit Sold)

Cost of goods manufactured and sold:

Direct materials

_

$30.00

Direct labor

_

8.40

Factory overhead:

Depreciation of plant and equipment

$ 4,000

_

Other factory overhead

1,400

4.80

Selling expenses:

Sales salaries and commissions

12,800

13.50

Advertising

13,200

_

Miscellaneous selling expense

1,000

2.50

Administrative expenses:

Office and officers salaries

7,800

7.00

Supplies

500

1.20

Miscellaneous administrative expense

400

2.40

Balances of accounts receivable, prepaid expenses, and accountspayable at the end of the year are not expected to differsignificantly from the beginning balances. Federal income tax of$35,000 on 2017 taxable income will be paid during 2017. Regularquarterly cash dividends of $0.20 per share are expected to bedeclared and paid in March, June, September, and December on 20,000shares of common stock outstanding. It is anticipated that fixedassets will be purchased for $22,000 cash in May.

Required:

X

Part 1: Budgeted Income Statement

1. Prepare a budgeted income statement for2017.

Mesa Publishing Co.

Budgeted Income Statement

For the Year Ending December 31, 2017

$

Cost of goods sold:

$

Cost of goods sold

Gross profit

$

Operating expenses:

Selling expenses:

$

Total selling expenses

$

Administrative expenses:

$

Total administrative expenses

Total operating expenses

Income before income tax

$

$

X

Part 2: Budgeted Balance Sheet

2. Prepare a budgeted balance sheet as ofDecember 31, 2017.

Mesa Publishing Co.
Budgeted Balance Sheet
December 31, 2017

Assets

Current assets:

Inventories:

Total current assets

Property, plant, and equipment:

Total assets

Liabilities

Current liabilities:

Stockholders' Equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

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