AFM123 Lecture Notes - Weighted Arithmetic Mean, Income Statement, Finished Good
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Zoe Corporation has the following information for the month ofMarch:
Purchases | $92,000 |
Materials inventory, March 1 | 6,000 |
Materials inventory, March 31 | 8,000 |
Direct labor | 25,000 |
Factory overhead | 37,000 |
Work in process inventory, March1 | 22,000 |
Work in process inventory, March31 | 23,500 |
Finished goods inventory, March1 | 21,000 |
Finished goods inventory, March31 | 30,000 |
Sales | 257,000 |
Selling and administrativeexpenses | 79,000 |
Required:
Prepare (a) a schedule of costof goods manufactured, (b) an income statement for the month endedMarch 31, and (c) the Inventory section of the balance sheet. Referto the Labels and Amount Descriptions provided for the exactwording of the answer choices for text entries. Be sure to completethe statement heading. âLessâ or âPlusâ will automatically appearif it is required. You will not need to enter colons (:) on thefinancial statements. Enter all amounts as positivenumbers. |
Labels and Amount Descriptions
Labels | |
Direct materials | |
For the Month Ended March 31 | |
Inventories | |
March 31 | |
Operating expenses | |
Amount Descriptions | |
Beginning finished goodsinventory | |
Beginning materials inventory | |
Beginning work in processinventory, March 1 | |
Cost of finished goods availablefor sale | |
Cost of goods manufactured | |
Cost of goods sold | |
Cost of materials available foruse | |
Cost of materials used | |
Direct labor | |
Ending finished goodsinventory | |
Ending materials inventory | |
Ending work in processinventory | |
Factory overhead | |
Finished goods | |
Gross profit | |
Materials | |
Net income | |
Net loss | |
Purchases | |
Sales | |
Selling and administrativeexpenses | |
Total inventories | |
Total manufacturing costs | |
Total manufacturing costsincurred | |
Work in process |
Statement of Cost of Goods Manufactured
Prepare a schedule of cost of goods manufactured. Refer to theLabels and Amount Descriptions provided for the exact wording ofthe answer choices for text entries. Be sure to complete thestatement heading. âLessâ or âPlusâ will automatically appear if itis required. You will not need to enter colons (:) on the statementof cost of goods manufactured. Enter all amounts as positivenumbers.
Zoe Corporation |
Statement of Cost of Goods Manufactured |
1 | ||||
2 | ||||
3 | ||||
4 | ||||
5 | ||||
6 | ||||
7 | ||||
8 | ||||
9 | ||||
10 | ||||
11 | ||||
12 | ||||
13 |
Income Statement
Prepare an income statement for the month ended March 31. Referto the Labels and Amount Descriptions provided for the exactwording of the answer choices for text entries. Be sure to completethe statement heading. âLessâ or âPlusâ will automatically appearif it is required. You will not need to enter colons (:) on theincome statement.
Zoe Corporation |
Income Statement |
1 | |||
2 | |||
3 | |||
4 | |||
5 | |||
6 | |||
7 | |||
8 | |||
9 | |||
10 | |||
11 |
Partial Balance Sheet
Prepare the Inventory section of the balance sheet. Refer to theLabels and Amount Descriptions provided for the exact wording ofthe answer choices for text entries. Be sure to complete thestatement heading. You will not need to enter colons (:) on thebalance sheet.
Zoe Corporation |
Partial Balance Sheet |
1 | ||
2 | ||
3 | ||
4 | ||
5 |
The costs listed in the following related to the factory were incurred during the period. (Hint: Record these items in one entry with one debit to manufacturing overhead and four separate credits):
Building depreciation | $580,000 |
Insurance (prepaid during 2016, now expired) | $220,000 |
Utilities (on account) | $ 80,000 |
Maintenance (paid cash) | $440,000 |
-Manufacturing overhead was applied at a rate of $20 per machine hour, and 90,000 machine hours were utilized during the year. (Hint: No need to calculate the predetermined overhead rate since it is already given to you here.)
-Miscellaneous selling costs totaling $430,000 were paid. These costs were recorded in an account called selling expenses.
-Miscellaneous general and administrative costs totaling $265,000 were paid. These costs were recorded in an account called G&A expenses.
-Goods costing $2,030,000 (per the job cost sheets) were completed and transferred out of work-in-process inventory.
-Goods were sold on account for $3,800,000.
-The goods sold in transaction 12 had a cost of $2,570,000 (per the job cost sheets).
-Payments totaling $3,300,000 from credit customers related to transaction 12 were received
Required:
Prepare T-accounts for raw materials inventory, work-in-process inventory, finished goods inventory, manufacturing overhead, and cost of goods sold. Enter the beginning balances for the inventory accounts. (Manufacturing overhead and cost of goods sold are temporary accounts and thus do not have a beginning balance.)
Prepare a journal entry for each transaction from 1 through 14 in a format like the one in Figure 2.7, and where appropriate, post each entry to the T-accounts set up in requirement a. Note that these entries reflect the flow of costs through the inventory and cost of goods sold accounts for the year, so you are only posting the dollar amounts related to the T-accounts set up in requirement a. Label each entry in the T-accounts by transaction number, include a short description (e.g., direct materials and manufacturing overhead applied), and total each T-account.
Based on the balance in the manufacturing overhead account prepared in requirement b, prepare a journal entry to close the manufacturing overhead account to cost of goods sold.
Prepare an income statement for the year ended December 31, 2016. Remember to adjust cost of goods sold for any underapplied or overapplied overhead from requirement c.
Why is cost of goods sold adjusted upward on the income statement?