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Financial statements of a manufacturing firm The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes: • Purchased $320,000 of materials • Used $275,000 of direct materials in production • Incurred $236,000 of direct labor wages • Applied factory overhead at a rate of 75% of direct labor cost • Transferred $652,000 of work in process to finished goods • Sold goods with a cost of $630,000 • Sold goods for $1,120,000 • Incurred $252,800 of selling expenses • Incurred $100,000 of administrative expenses a. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method b. Determine the inventory balances at the end of the first month of operations.

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 19, Problem 19.13EX
Textbook Problem

Financial statements of a manufacturing firm

The following events took place for Focault Inc. during July 20Y2, the first month of operations as a producer of road bikes:

• Purchased $320,000 of materials

• Used $275,000 of direct materials in production

• Incurred $236,000 of direct labor wages

• Applied factory overhead at a rate of 75% of direct labor cost

• Transferred $652,000 of work in process to finished goods

• Sold goods with a cost of $630,000

• Sold goods for $1,120,000

• Incurred $252,800 of selling expenses

• Incurred $100,000 of administrative expenses

a. Prepare the July income statement for Focault. Assume that Focault uses the perpetual inventory method

b. Determine the inventory balances at the end of the first month of operations.

Expert Solution

(a)

To determine

Income statement:

The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

To prepare: the income statement for Company F.

Explanation of Solution

The income statement for Company F is prepared as follows:

...
Company F
Income statement
For the month ended July 31
  Amount
($)
Amount
($)
Revenues   1,120,000
Less: Cost of goods sold   630,000
Gross profit
Expert Solution

(b)

To determine
the inventory balance at the end of the first month of operations for company F.

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Chapter 19 Solutions

Accounting
Show all chapter solutions
Ch. 19 - Issuance of materials On May 7, Bergan Company...Ch. 19 - Issuance of materials On August 4, Rothchild...Ch. 19 - Direct labor costs During May, Bergan Company...Ch. 19 - Direct labor costs During August, Rothchild...Ch. 19 - Factory overhead costs During May, Bergan Company...Ch. 19 - Factory overhead costs During August, Rothchild...Ch. 19 - Applying factory overhead Bergan Company estimates...Ch. 19 - Applying factory overhead Rothchild Company...Ch. 19 - Job costs At the end of May, Bergan Company had...Ch. 19 - Job costs At the end of August, Rothchild Company...Ch. 19 - Transactions in a job order cost system Five...Ch. 19 - Cost of materials issuances under the FIFO method...Ch. 19 - Entry for issuing materials Materials issued for...Ch. 19 - Entries for materials GenX Furnishings...Ch. 19 - Entry for factory labor costs A summary of the...Ch. 19 - Entry for factory labor costs The weekly time...Ch. 19 - Entries for direct labor and factory overhead...Ch. 19 - Factory overhead rates, entries and account...Ch. 19 - Predetermined factory overhead rate Street....Ch. 19 - Predetermined factory overhead rate Poehling...Ch. 19 - Entry for jobs completed; cost of unfinished jobs...Ch. 19 - Entries for factory costs and jobs completed Old...Ch. 19 - Financial statements of a manufacturing firm The...Ch. 19 - Decision making with job order costs Alvarez...Ch. 19 - Decision making with job order costs Raneri...Ch. 19 - Job order cost accounting for a Service company...Ch. 19 - Job order cost accounting for a service company...Ch. 19 - Entries for costs in a job order cost system...Ch. 19 - Entries and schedules for unfinished jobs and...Ch. 19 - Job order cost sheet Remnant Carpet Company sells...Ch. 19 - Analyzing manufacturing cost accounts Fire Rock...Ch. 19 - Flow of costs and income statement Ginocera Inc....Ch. 19 - Entries for costs in a job order cost system Royal...Ch. 19 - Entries and schedules for unfinished Jobs and...Ch. 19 - Job order cost sheet Stretch and Trim Carpet...Ch. 19 - Analyzing manufacturing cost accounts Clapton...Ch. 19 - Flow of costs and income statement Technology...Ch. 19 - Communication TAC Industries sells heavy equipment...Ch. 19 - Predetermined overhead rates As an assistant cost...Ch. 19 - Communication Carol Creedence, the plant manager...Ch. 19 - Job order decision making and rate deficiencies...Ch. 19 - Recording manufacturing costs Todd Lay just began...

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