Question

Corporation is a private corporation formed for the purpose of providing the products and the services needed to irrigate farms, parks, commercial products, and private homes. It has a centrally located factory in a U.S. city that manufactures the products it markets to retail outlets across the nation. It also maintains a division that provides installation and warranty servicing in six metropolitan areas. The month of November has just ended and Waterways needs to generate a cost of goods manufactured and cost of goods sold for its income statement for the month. The following data is provided:
Accounts Receivable $290,000
Advertising Expense 52,000
Cash 255,000
Depreciation-Factory Equipment 17,500
Depreciation-Office Equipment 2,900
Direct labor 44,000
Factory Supplies USed 16,300
Factory Utilities 10,500
Finished Goods Inventory - November 30 71,800
Finished Goods Inventory - October 31 73,500
Indirect labor 45,000
Office Supplies Expenses 71,000
Prepaid Expenses 42,500
Raw Materials Inventory - November 30 53,000
Raw materials Inventory - October 31 41,000
Raw Materials Purchases 186,500
Rent - Factory Equipment 45,000
Repairs - Factory Equipment 5,400
Salaries 335,000
Sales 1,425,000
Sales Commissions 42,750
Work in Process Inventory - November 30 44,000
Work in Process Inventory - October 31 51,000
Property Tax on Factory 5,500

Required:
From the above information, prepare a cost of goods manufactured schedule, an income statement, and the current asset section of the balance sheet for Waterways Corporation for the month of November.

Answer 1

Answer:

Cost of Goods Manufactured  356,700

Net Profit before Income Tax=  566,350

Explanation:

Waterways Corporation

Cost of Goods Manufactured Schedule

Raw materials Inventory - October 31 41,000

Add Raw Materials Purchases 186,500

Less Raw Materials Inventory - November 30 53,000

Raw Materials Used = 174,500

Direct labor               44,000

Factory Overhead:   145,200

Indirect labor 45,000

Factory Utilities 10,500

Factory Supplies Used 16,300

Depreciation-Factory Equipment 17,500

Property Tax on Factory 5,500

Rent - Factory Equipment 45,000

Repairs - Factory Equipment 5,400

Total Manufacturing Costs     363,700

Add Work in Process Inventory - November 30 44,000

Cost of Goods Available for Manufacture 407,700

Less Work in Process Inventory - October 31 51,000

Cost of Goods Manufactured  356,700

Waterways Corporation

Cost of Goods Sold Schedule

Cost of Goods Manufactured  356,700

Add Finished Goods Inventory - November 30 71,800

Cost of Goods Available for Sale    428,500

Less Finished Goods Inventory - October 31 73,500

Cost Of Goods Sold  355,000

Waterways Corporation

Income Statement for the month of November

Sales 1,425,000

Less Cost of Goods Sold 355,000

Gross Profit  1070,000

Less  Operating expenses : 503650

Office Supplies Expenses 71,000

Advertising Expense 52,000

Salaries 335,000

Depreciation-Office Equipment 2,900

Sales Commissions 42,750

Net Profit before Income Tax=  566350

( here the salaries are treated as office salaries not factory salaries)

Waterways Corporation

Balance Sheet for the month of November

Assets

Cash 255,000

Accounts Receivable $290,000

Prepaid Expenses 42,500