Prepare the income statement for Striker Company using the data in E2-37B for th

Question

Prepare the income statement for Striker Company using the data in E2-37B for the most recent year. Assume that the company sold 35,000 units of its product at a price of $13 each during the year. Lindy Electronics manufactures and sells smartphones. Unfortunately, the company recently suffered serious fire damage at its home office. As a result, the accounting records for October were partially destroyed and completely jumbled. Lindy has hired you to help figure out the missing pieces of the accounting puzzle. Assume that Lindy Electronics Raw Materials Inventory contains only direct materials. Find the following amounts: Cost of Goods Sold in October Beginning Raw Materials Inventory Ending Finished Goods Inventory Classify each of the following costs as relevant or irrelevant to the decision at hand and briefly explain your reason. The purchase price of the old computer when replacing it with a new computer with improved features The cost of renovations when deciding whether to build a new office building or to renovate the existing office building The original cost of the current stove when selecting a new, more efficient stove for a restaurant

Explanation / Answer

Direct Material used= Beginning raw material inventory + purchases –Ending raw material inventory

8200 =     Beginning raw material inventory +9700-3600

Beginning raw material inventory = $ 2100

Gross profit = Sales – Cost of goods sold

12300=27200- Cost of goods sold

Cost of goods sold = 14900

Direct material used 8200 Direct labor 3500 Prime cost 11700 Add Beginning WIP 0 Add Manufacturing overhead 6300 Less Ending WIP 1600 Cost of goods manufactured 16400 Add Beginning Finished goods 4900 Less Ending Finished goods 6400 Cost of goods sold 14900 Gross Profit 12300 Sales 27200

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