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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Income statement for a manufacturing company

Two items are omitted from each of the following three lists of cost of goods sold data from a manufacturing company income statement. Determine the amounts of the missing items, identifying them by letter.

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To determine

Income statement for a manufacturing company:

The income statement of merchandising business and manufacturing business differs mostly due to the reporting of the cost of merchandise available for sale and sold during the period.

Cost of goods sold:

Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

To determine: The amount of missing items in the income statement for a manufacturing company.

Explanation

The missing items in the income statement for a manufacturing company are determined as follows:

Particulars $ $ $
Finished goods inventory, June 1 116,600 38,880 (e) 920,000
Cost of goods manufactured 825,900 (c)                   501,120 180,000
Cost of finished goods available for sale (a) 942,500 540,000 1,100,000
Less: Finished goods inventory, June  30 130,000 70,000 (f) 155,000
Cost of goods sold (b) 812,500 (d) 470,000 945,000

Table (1)

Working notes:

  1. 1. For (a), the amount is determined as follows:

Cost of finished goods available for sale}[Finished goods inventory,June1+Cost ofgoods manufactured]=$116,600+$825,900=$924,500

(a)

  1. 2. For (b), the amount is determined as follows:

Cost of goods sold[Cost of finished goods available for saleFinished goods inventory, June 30]=$942,500$130,000=$812,500

(b)

  1. 3. For (c), the amount is determined as follows:

Cost ofgoods manufactured[Cost of finished goods available for saleFinished goods inventory,June1]=$501,120$38,880=$474,120

(c)

  1. 4

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