Question

Financial Statements of a Manufacturing Firm

Answer 1

Answer:

A. income statement for Sorensen Manufacturing Company.

Sales                                                                                                 $234,700

Less Cost of  Sales

Opening Finished Goods Inventory                                    0

Cost of Manufacture                                                     $131,300

Less Finished Goods Inventory (131,300 - 104,400) ($26,900)    ($104,400)

Gross Profit                                                                                       $130,300

Less Expenses

Selling Expense                                                                                ($60,000)

Administrative Expense                                                                   ($26,400)

Net Income / (loss)                                                                             $43,900

B. inventory balances at the end of the first month

Work In Process Inventory = $41,500

Raw Materials Inventory     = $11,200

Finished Goods Inventory  = $26,900

Explanation:

Calculation of Work in Process Inventory

Direct Materials                            $37,600

Direct Labor                                   $56,100

Factory Overhead                         $79,100

Total Cost of Manufacture          $172,800

Less Closing Work in Process     ($41,500)

Cost of Manufacture                    $131,300

Calculation of Raw Materials Inventory

Opening Raw Materials Inventory                            $0

Add Purchases                                                      $48,800

Less Raw Materials Unsed In Manufacturing     ($37,600)

Closing  Raw Materials Inventory                         $11,200

Calculation of Finished Goods Inventory

Opening Stock of Finished Goods                          $0

Add Costs of Goods Manufactured                    $131,300

Less Cost of Goods Sold                                   ($104,400)

Opening Stock of Finished Goods                      $26,900