Chapter 1 Problem 2-10
Problem 2-10
Ronald Company
Statement of Cost of Goods Manufactured
Year Ended December 31, 2008
Materials – January 1 1,120,000
Purchases 1,600,000
Freight on purchases 220,000
Purchase discounts ( 20,000) 1,800,000
Materials available for use 2,920,000
Less: Materials – December 31 1,560,000
Materials used 1,360,000
Direct labor 2,000,000
Factory overhead:
Heat, light and power 600,000
Repairs and maintenance 100,000
Indirect labor 360,000
Other factory overhead 340,000
Factory supplies used (300,000 + 660,000 – 540,000) 420,000
Depreciation – factory building 280,000 2,100,000
Total manufacturing cost 5,460,000
Goods in process – January 1 360,000
Total cost of goods in process 5,820,000
Less: Goods in process – December 31 320,000
Cost of goods manufactured 5,500,000
24
Ronald Company
Income Statement
Year Ended December 31, 2008
Note
Net sales revenue (1) 6,980,000
Cost of goods sold (2) (5,400,000)
Gross income 1,580,000
Other income (3) 160,000
Total income 1,740,000
Expenses:
Selling expenses 200,000
Administrative expenses 340,000 540,000
Income before tax 1,200,000
Income tax expense ( 200,000)
Net income 1,000,000
Note 1 – Net sales revenue
Sales 7,120,000
Sales returns and allowances ( 140,000)
Net sales revenue 6,980,000
Note 2 – Cost of goods sold
Finished goods – January 1 420,000
Cost of goods manufactured 5,500,000
Goods available for sale 5,920,000
Finished goods – December 31 ( 520,000)
Cost of goods sold 5,400,000
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