Problem 18-3A Schedule of cost of goods manufactured and income statement; inven
ID: 2578993 • Letter: P
Question
Problem 18-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1
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The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.
Problem 18-3A Part 2
2. Prepare the company’s 2017 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.
Advertising expense $ 34,300 Direct labor $ 674,200 Depreciation expense—Office equipment 9,800 Income taxes expense 289,900 Depreciation expense—Selling equipment 9,800 Indirect labor 56,000 Depreciation expense—Factory equipment 35,300 Miscellaneous production costs 10,900 Factory supervision 131,500 Office salaries expense 74,000 Factory supplies used 8,400 Raw materials purchases 930,000 Factory utilities 40,000 Rent expense—Office space 25,000 Inventories Rent expense—Selling space 29,200 Raw materials, December 31, 2016 167,600 Rent expense—Factory building 82,400 Raw materials, December 31, 2017 185,000 Maintenance expense—Factory equipment 38,400 Work in process, December 31, 2016 17,000 Sales 4,466,700 Work in process, December 31, 2017 23,200 Sales salaries expense 396,600 Finished goods, December 31, 2016 162,900 Finished goods, December 31, 2017 141,200Explanation / Answer
Leone Company Income Statement For the year ended December 31, 2017 Sales $ 4,466,700 Less: Cost of goods sold Beginning finished goods inventory $ 162,900 Add: Cost of goods manufactured Direct Meterial Beginning raw meterial inventory $ 167,600 Add: Purchase of raw meterial $ 930,000 Raw meterials available for production $ 1,097,600 Less: Ending raw meterial inventory $ 185,000 Raw meterials transferred to production $ 912,600 Direct Labour $ 674,200 Depreciation expense - factory equipment $ 35,300 Factory supervision $ 131,500 Factory supplies $ 8,400 Factory utilities $ 40,000 indirect labour $ 56,000 Misc. production cost $ 10,900 Rent expense - factory building $ 82,400 Maintenance expense - factory equipment $ 38,400 Beginning work in progress inventory $ 17,000 Less: Ending work in progress inventory $ 23,200 Cost of goods manufactured $ 1,983,500 Less: Ending finished goods inventory $ 141,200 Cost of goods sold $ 2,005,200 Gross Margin $ 2,461,500 Selling Expenses Advertising expense $ 34,300 Depreciation expense - selling equipment $ 9,800 Rent expense - selling space $ 29,200 Sales salaries expense $ 396,600 Total selling expenses $ 469,900 Administrative expenses Depreciation expense - office equipment $ 9,800 Office salaries expense $ 74,000 Rent expense - office space $ 25,000 Total administrative expenses $ 108,800 Income before income tax $ 1,882,800 Income tax expense $ 289,900 Net Income $ 1,592,900