Incomplete manufacturing costs, expenses, and selling data for two different cases
are as follows.
Case
1 2
Direct Materials Used $ 8,300 (g)
Direct Labor 3,000
$
4,000
Manufacturing Overhead 6,000 5,000
Total Manufacturing Costs (a) 20,000
Beginning Work in Process Inventory 1,000 (h)
Ending Work in Process Inventory (b) 2,000
Sales 22,500 (i)
Sales Discounts 1,500 1,200
Cost of Goods Manufactured 15,800 21,000
Beginning Finished Goods Inventory (c) 4,000
Goods Available for Sale 17,300 (j)
Cost of Goods Sold (d) (k)
Ending Finished Goods Inventory 1,200 2,500
Gross Profit (e) 6,000
Operating Expenses 2,700 (l)
Net Income (f) 3,200
Instructions
(a) Indicate the missing amount for each letter.
(b) Prepare a condensed cost of goods manufactured schedule for Case 1.
(c) Prepare an income statement and the current assets section of the balance sheet for
Case 1. Assume that in Case 1 the other items in the current assets section are as follows:
Cash $3,000, Receivables (net) $10,000, Raw Materials $700, and Prepaid Expenses
$200.
do you have any idea?
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(a) Missing amounts:
(g) $14,000
(h) $0
(i) $23,700
(k) $14,500
(l) $3,800
(b) Condensed cost of goods manufactured schedule for Case 1:
Cost of Goods Manufactured
Beginning Work in Process Inventory $1,000
+ Total Manufacturing Costs $20,000
= Total Cost of Work in Process $21,000
- Ending Work in Process Inventory $2,000
= Cost of Goods Manufactured $19,000
(c) Income Statement for Case 1:
Sales $22,500
- Sales Discounts $1,500
= Net Sales $21,000
Cost of Goods Sold
Beginning Finished Goods Inventory $4,000
+ Cost of Goods Manufactured $19,000
= Goods Available for Sale $23,000
- Ending Finished Goods Inventory $1,200
= Cost of Goods Sold $21,800
Gross Profit
Net Sales $21,000
- Cost of Goods Sold $21,800
= Gross Profit ($800)
Operating Expenses $2,700
Net Income
Gross Profit ($800)
- Operating Expenses $2,700
= Net Income ($3,500)
Current Assets section of the balance sheet for Case 1:
Current Assets
Cash $3,000
Receivables (net) $10,000
Raw Materials $700
Prepaid Expenses $200
Finished Goods Inventory $1,200
= Total Current Assets $15,100
To find the missing amounts (g), (h), (i), (j), (k), and (l), and prepare the cost of goods manufactured schedule, income statement, and current assets section of the balance sheet for Case 1, we can follow these steps:
(a) Indicate the missing amount for each letter:
(g) Direct Materials Used: It is not provided for Case 2, so the missing amount is $0.
(h) Beginning Work in Process Inventory: The missing amount is $1,000 (given).
(i) Sales: The missing amount is $22,500 (given).
(j) Goods Available for Sale: It is the sum of Beginning Finished Goods Inventory (c) and Cost of Goods Manufactured. The missing amount is $17,300.
(k) Cost of Goods Sold: It is the sum of Goods Available for Sale (j) and Ending Finished Goods Inventory. The missing amount is $15,500 (calculated as $17,300 - $1,200).
(l) Operating Expenses: The missing amount is $2,700 (given).
(b) Prepare a condensed cost of goods manufactured schedule for Case 1:
Cost of Goods Manufactured Schedule:
Direct Materials Used: $8,300
Direct Labor: $3,000
Manufacturing Overhead: $6,000
Total Manufacturing Costs: $17,300
Add: Beginning Work in Process Inventory: $1,000
Less: Ending Work in Process Inventory: $2,000
Cost of Goods Manufactured: $15,300
(c) Prepare an income statement and the current assets section of the balance sheet for Case 1:
Income Statement:
Sales: $22,500
Less: Sales Discounts: $1,500
Net Sales: $21,000
Cost of Goods Sold: $15,500 (calculated above)
Gross Profit: $5,500
Operating Expenses: $2,700 (given)
Net Income: $2,800 (calculated as $5,500 - $2,700)
Current Assets Section of the Balance Sheet:
Cash: $3,000 (given)
Receivables (net): $10,000 (given)
Raw Materials: $700 (given)
Direct Materials Used: $8,300 (calculated above)
Work in Process Inventory: $2,000 (given)
Finished Goods Inventory: $1,200 (given)
Prepaid Expenses: $200 (given)
Total Current Assets: $25,400 (calculated as $3,000 + $10,000 + $700 + $8,300 + $2,000 + $1,200 + $200)