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Tuesday, August 3, 2010

Valix Finacc vol 1 Problem 2-9

Financial Accounting Volume 1 2008 Valix-Peralta
Chapter 1 Problem 2-9


Christian Company
Statement of Cost of Goods Manufactured
Year Ended December 31, 2008

Purchases                                                                                                               1,600,000
Freight in                                                                                                                      80,000
Total                                                                                                                       1,680,000
Increase in raw materials                                                                                      (  100,000)
Raw materials used                                                                                                1,580,000
Direct labor                                                                                                            1,480,000
Factory overhead:
    Indirect labor                                                                                   600,000
    Depreciation – machinery                                                                 50,000
    Factory taxes                                                                                   130,000
    Factory supplies expense                                                                 120,000
    Factory superintendence                                                                 480,000
    Factory maintenance                                                                      150,000
    Factory heat, light and power                                                        220,000      1,750,000
Total manufacturing cost                                                                                      4,810,000
Decrease in goods in process                                                                       90,000
Cost of goods manufactured                                                                   4,900,000


Christian Company
Income Statement
Year Ended December 31, 2008

                                                                                   Note
Sales revenue                                                                                                        8,000,000
Cost of goods sold                                                       (1)                                    (5,100,000)
Gross income                                                                                                        2,900,000
Expenses:
    Selling expenses                                                        (2)                   800,000
    Administrative expenses                                           (3)                    930,000      1,730,000  
Income before tax                                                                                                1,170,000
Income tax expense                                                                                              (  170,000)
Net income                                                                                                           1,000,000


Note 1 – Cost of goods sold


Cost of goods manufactured                                                                  4,900,000
Decrease in finished goods                                                                                     200,000
Cost of goods sold                                                                                               5,100,000




                                                                                                             23

 



Note 2 – Selling expenses


Sales salaries                                                                                                                520,000
Advertising                                                                                                                  120,000
Delivery expense                                                                                                          160,000
Total                                                                                                                            800,000

Note 3 – Administrative expenses


Office supplies expense                                                                                                 30,000
Office salaries                                                                                                              800,000
Doubtful accounts                                                                                                      100,000
Total                                                                                                                            930,000

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