The accounting records of Nu-tonics Inc., include the following information for the year ended December 31, 2013:
Materials Inventory as at 1 January 2013 $ 20,000
Materials Inventory as at 31 December 2013 $ 24,000
Work in process Inventory as at 1 January 2013 $ 12,000
Work in process Inventory as at 31 December 2013 $ 8,000
Finished goods Inventory as at 1 January 2013 $ 80,000
Finished goods Inventory as at 31 December 2013 $ 90,000
Direct Materials used $210,000
Direct Labour $ 120,000
Administrative Expenses $ 310,000
Sales $ 700,000
Required:
1. Prepare a Schedule of the Cost of Finished Goods Manufactured for the year ended 31 December 2013.
2. Prepare the Income statement for the period ending 31 December 2013.
To prepare the Schedule of the Cost of Finished Goods Manufactured and the Income Statement, we need to gather and analyze the relevant information from the provided accounting records. Here's how we can calculate the required figures:
1. Schedule of Cost of Finished Goods Manufactured:
The Schedule of Cost of Finished Goods Manufactured summarizes the costs incurred in the production process and calculates the total cost of goods manufactured. To calculate this:
Beginning Work in Process Inventory: $12,000
Add: Direct materials used: $210,000
Add: Direct labor: $120,000
Total manufacturing costs incurred: $342,000
Less: Ending Work in Process Inventory: $8,000
Cost of goods manufactured: ?
To find the Cost of Goods Manufactured, subtract the Ending Work in Process Inventory (WIP) from the Total Manufacturing Costs Incurred. In this case:
$342,000 - $8,000 = $334,000
Therefore, the Cost of Finished Goods Manufactured for the year ended December 31, 2013, is $334,000.
2. Income Statement:
The Income Statement summarizes the revenues, expenses, and net income generated during a specific period. To calculate this:
Sales: $700,000
Less: Cost of Goods Sold: ?
To find the Cost of Goods Sold, we need to calculate the opening and closing inventories and the cost of materials used. The opening inventories are given, but we need to calculate the closing inventories first:
Materials Inventory as at 1 January 2013: $20,000
Add: Direct Materials used: $210,000
Total materials available: $230,000
Less: Materials Inventory as at 31 December 2013: $24,000
Cost of materials used: ?
To find the Cost of Materials Used, subtract the Materials Inventory as at 31 December 2013 from the Total Materials Available:
$230,000 - $24,000 = $206,000
Now, to calculate the Cost of Goods Sold:
Beginning Finished Goods Inventory: $80,000
Add: Cost of Goods Manufactured: $334,000
Cost of Goods Available for Sale: $414,000
Less: Ending Finished Goods Inventory: $90,000
Cost of Goods Sold: ?
To find the Cost of Goods Sold, subtract the Ending Finished Goods Inventory from the Cost of Goods Available for Sale:
$414,000 - $90,000 = $324,000
Therefore, the Cost of Goods Sold is $324,000.
Now, let's prepare the Income Statement:
Sales: $700,000
Less: Cost of Goods Sold: $324,000
Gross Profit: $376,000
Less: Administrative Expenses: $310,000
Net Income: ?
To find the Net Income, subtract the Administrative Expenses from the Gross Profit:
$376,000 - $310,000 = $66,000
Therefore, the Net Income for the period ending on December 31, 2013, is $66,000.
So, the Schedule of the Cost of Finished Goods Manufactured is $334,000, and the Income Statement shows a Net Income of $66,000 for the period ending on December 31, 2013.