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
<u>Add: Purchases 37,000 </u>
Total Goods available for sale 49,700
<u>Less: Inventory, end 9,600 </u>
<u>Cost of goods sold $40,100 </u>
<u>Gross profit $12,900 </u>
Less: Operating expenses
Utilities expense 1,400
Rent expense 4,600
<u>Sales commission 4 ,900 </u>
<u>Total operating expense $10,900 </u>
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
<u>Add:Purchases 34,000 </u>
Raw materials available 45,000
<u>Less: Raw material, end 6,500 </u>
Cost of raw material used 38,500
<u>Add: Direct labor 20,000 </u>
Prime Cost 58,500
<u> Add: Factory overhead 22,350 </u>
Manufacturing cost 80,850
Add: Work in process, beginning -
<u> Less: Work in process, Ending 3,500 </u>
Cost of Goods Manufactured 77,350
Add: Finished goods, beginning -
Cost of goods available for sale 77,350
<u>Less: Finished goods, ending 4,000 </u>
<u>Cost of goods sold 73,350 </u>
Gross profit $35,650
Less: Operating expenses
<u> Customer service hotline 1,700 </u>
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
<u>Add:Purchases 34,000 </u>
Raw materials available 45,000
<u>Less: Raw material, end 6,500 </u>
Cost of raw material used 38,500
<u>Add: Direct labor 20,000 </u>
Prime Cost 58,500
<u> Add: Factory overhead 22,350 </u>
Manufacturing cost 80,850
Add: Work in process, beginning -
<u> Less: Work in process, Ending 3,500 </u>
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.