Exhibit 3-2 Bradley Paper Company Example of Manufacturing Cost Flows for Bradley Paper Company Partial Balance Sheet Work-in-Process Inventory As of December 31, 20x1 Current assets: Direct-material cost 30,000 Cash.. XXX Direct-labor cost 20,000 60,000 Accounts receivable.... XXX Manufacturing overhead 40,000 Inventory: Raw material. XXX Balance 30,000 -- Work in process. $30,000 Finished goods .. 35,000 Finished-Goods Inventory 60,000 25,000 Balance 35,000 Cost of Goods Sold Bradley Paper Company Partial Income Statement 25,000 -- For the Year 20x1 $32,000 25,000 Sales revenue Less: Cost of goods sold.. Sales Revenue Gross margin. $ 7,000 32,000 -
Reimel Furniture Company, Inc. incurred the following costs during 20x2.
Direct material used ........................................................................................$174,000
Direct labor ...........................................................................................................324,000
Manufacturing overhead applied ................................................................180,000
During 20x2, products costing $120,000 were finished, and products costing $132,000 were sold on account for $195,000. There were no purchases of raw material during the year. The beginning balances in the firm’s inventory accounts are as follows:
Raw material ..................................................................................................$227,000
Work in process ................................................................................................18,000
Finished goods ..................................................................................................30,000
Required:
1. Prepare T-accounts to show the flow of costs through the company’s manufacturing accounts during 20x2.
2. Prepare a partial balance sheet and a partial income statement to reflect the information given above. (Hint: See Exhibit 3–2.)
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