Question

Incomplete manufacturing costs, expenses, and selling data for two different cases are as follows.

Answer 1

Answer:

Cost of goods manufactured schedule for Case1

Opening Work In Process                  $1,000

Add Total Manufacturing Costs       $16,000

Less Ending Work In Process          ($3,000)

Cost of goods manufactured           $14,000

Income statement for Case 1

Sales                                                                                              $24,500

Less Sales discounts                                                                     ($2,500)

Net Sales Revenue                                                                       $22,000

Less Cost of Goods Sold

Beginning Finished Goods Inventory                 $3,300

Add Cost of goods manufactured                     $14,000

Less Ending Finished Goods Inventory            ($3,400)          ($13,900)

Gross Profit                                                                                     $8,100

Less Operating expenses                                                           ($2,500)

Net Income                                                                                    $2,500

Current assets section :

Inventory :

    Raw Materials                                      $600

    Work In Process                               $3,000

    Finished Goods                                $3,400

Receivables (net)                                 $15,000

Prepaid Expenses                                    $400

Cash                                                      $4,000

Total Current Assets                          $26,400

Explanation:

Part b

Cost of Goods Manufactured = Opening Work In Process + Total Manufacturing Costs - Ending Work In Process

Part c

Income statement shows the Profit earned during the reporting period

Profit = Gross Profit - Operating expenses

Part d

The current assets section will include assets of a short term nature (not exceeding a period of 12 months). For a manufacturing company, it is important to show each inventory balance in the inventory categories of Raw Materials, Work In Process and Finished Goods among other items.

Note : Current Assets are shown in their order of liquidity in the Balance Sheet as above.