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3 years ago

Prepare income statements (Learning Objective 5)

Business

1 answer:

Gelneren [198K]3 years ago

7 0

Answer:

Part 1 Penny Henderson

Income Statement

For the year ended December 31, 2013

Sales $53,000

Less: Cost of goods sold

Beginning Inventory 12,700

Add: Purchases 37,000

Total Goods available for sale 49,700

Less: Inventory, end 9,600

Cost of goods sold $40,100

Gross profit $12,900

Less: Operating expenses

Utilities expense 1,400

Rent expense 4,600

Sales commission 4 ,900

Total operating expense $10,900

Net Income $2,000

Part 2

1. $77,350

2. Floral Manufacturing

Income Statement

For the year ended December 31, 2014

Sales $109,000

Less: Cost of goods sold

Raw materials, beginning 11,000

Add:Purchases 34,000

Raw materials available 45,000

Less: Raw material, end 6,500

Cost of raw material used 38,500

Add: Direct labor 20,000

Prime Cost 58,500

Add: Factory overhead 22,350

Manufacturing cost 80,850

Add: Work in process, beginning -

Less: Work in process, Ending 3,500

Cost of Goods Manufactured 77,350

Add: Finished goods, beginning -

Cost of goods available for sale 77,350

Less: Finished goods, ending 4,000

Cost of goods sold 73,350

Gross profit $35,650

Less: Operating expenses

Customer service hotline 1,700

Net Income $33,950

3. The difference between the 2013 and 2014 income statement is the composition of their cost of goods sold. In 2013, there is no cost of goods manufactured, raw materials and work in process account like 2014.

Part 3

1. Ending inventory of $9,600

2. Ending inventory of $14,000

Explanation:

Part 2

1. Floral Manufacturing

Statement of Cost of Goods Manufactured

For the year ended December 31, 2014

Raw materials, beginning 11,000

Add:Purchases 34,000

Raw materials available 45,000

Less: Raw material, end 6,500

Cost of raw material used 38,500

Add: Direct labor 20,000

Prime Cost 58,500

Add: Factory overhead 22,350

Manufacturing cost 80,850

Add: Work in process, beginning -

Less: Work in process, Ending 3,500

Cost of Goods Manufactured 77,350

3. The difference in the 2013 and 2014 preparation came from the balances of working in process and raw materials in the 2014 production wherein 2013 on the hand don't have it.

Part 3.

1. 2013 ending inventory consists of the goods not yet sold at the end of the year.

2. 2014 ending inventory consists of raw materials ending balance of $6,500 plus the work in process ending balance of $3,500 and the finished goods ending balance of $4,000.

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Using the constant growth model of dividend discount model, we can calculate the price of the stock today. The DDM values a stock based on the present value of the expected future dividends from the stock. The formula for price today under this model is,

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Sell foreign exchange assets and buy their own currency

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Money (cash) balances have the disadvantage of not offering any nominal return (zero interest rate); they have the advantage that you can use them to do transactions (buy/sell goods). Short term bonds have the advantage that they earn interest; however, they have the disadvantage that they cannot be used to make transactions (you need money to buy goods and services). So, an investor will decide to allocate its portfolio between money and bonds considering the benefits and costs of both instruments.

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Cash -p 0

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+ - +
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Answer:

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The computation of the revenue that should be recognized by the entity on the sale of product X is shown below;

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