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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

Manufacturing income statement, statement of cost of goods manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of May.

 

Rainier

Company

Yakima

Company

Materials inventory. May 1 $ 100,000 $ 48,200
Materials inventory. May 31 (a) 50,000
Materials purchased 950,000 710,000
Cost of direct materials used in production 938,500 (a)
Direct labor 2,860,000 (b)
Factory overhead 1,800,000 446,000
Total manufacturing costs incurred during May (b) 2,484,200
Total manufacturing costs 5,598,500 2.660.600
Work in process inventory. May 1 400,000 176,400
Work in process inventory. May 31 382,000 (c)
Cost of goods manufactured (c) 2,491,300
Finished goods inventory. May 1 615,000 190,000
Finished goods inventory, May 31 596,500 (d)
Sales 9,220,000 4,550,000
Cost of goods sold (d) 2,470,000
Gross profit (e) (e)
Operating expenses 1,000,000 (f)
Net income (f) 1,500,000

Instructions

1. Determine the amounts of the missing items, identifying them by letter.

2. Prepare Yakima Company’s statement of cost of goods manufactured for May.

3. Prepare Yakima Company’s income statement for May.

1.

To determine

Cost of goods manufactured:

Cost of goods manufactured refers to the costs incurred for manufacturing the goods during the period. A statement of cost of goods manufactured is prepared in order to determine the cost of goods manufactured, which in turn is used to determine the cost of goods sold, and prepare the income statement.

Income statement:

The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

To determine: The amounts of the missing items, identifying them by letter.

Explanation

Determine the amounts of the missing items.

Particulars Company R Company Y
Materials inventory, May 1 $ 100,000 $ 48,200
Materials inventory, May 31

(a)

111,500

50,000
Materials purchased 950,000 710,000
Cost of direct materials used in production 938,500

(a)

708,200

Direct labor 2,860,000

(b)

1,330,000

Factory overhead 1,800,000 446,000
Total manufacturing costs incurred during May

(b)

5,598,500

2,484,200
Total manufacturing costs 5,598,500 2,660,600
Work in process inventory, May 1 400,000 176,400
Work in process inventory, May 31 382,000

(c)

169,100

Cost of goods manufactured

(c)

5,616,500

2,491,500
Finished goods inventory, May 1 615,000 190,000
Finished goods inventory, May 31 596,500

(d)

211,500

Sales 9,220,000 4,550,000
Cost of goods sold

(d)

5,635,000

2,470,000
Gross profit

(e)

3,585,000

(e)

2,080,000

Operating expenses 1,000,000

(f)

580,000

Net income

(f)

2,585,000

1,500,000

Table (1)

Working notes:

  1. 1. Determine the amount (a) in Company R.

Materials inventory, May 31[Materials inventory, May 1+MaterialspurchasedCost of directmaterials used in production ]=$100,000+$950,000$938,500=$111,500 (a)

  1. 2. Determine the amount (a) in Company Y.

(Cost of direct materialsused in production)(Materials inventory, May 1+MaterialspurchasedMaterials inventory, May 31)=$48,200+$710,000$50,000=$708,200 (a)

  1. 3. Determine the amount (b) in Company Y.

Direct labor=(Total manufacturing costs incurred during MayCost of mterials used in productionFactory overhead)=$2,484,200$708,200$446,000=$1,330,000 (b)

  1. 4. Determine the amount (b) in Company R.

(Total manufacturing costsincurred during May)(Cost of direct materials used in production+Direct labor+Factory overhead)=($938,500+$2,860,000+$1,800,000)=$5,598,500 (b)

  1. 5. Determine the amount (c) in Company Y.

Work in progress, May 31[Total manufacturing costsCost of goods manufactured]=$2,660,600$2,491,500=$169,100 (c)

  1. 6

2.

To determine

To prepare: Company Y’s statement of cost of goods manufactured for May.

3.

To determine

To prepare: Company Y’s income statement for May.

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