The problem relates to material covered in Chapter 2.
Please post generic questions to the discussion board or
Due June 21 11:59 pm central
e-mail me if you have a specific question or unsure if it should be posted to the discussion board.
Send your completed problem by uploading your solution into the problem 1 assignment area in #2 of this assignment area.
Make sure you type in your name in cell A3 and
save your file with the first initial of your first name, last name, and title of problem-jstevensproblem1.xls
The problem solution is worth a total of 10 pts.
I will take off 5 pts. if you do not use the excel application
You need to use only cell references on the 2 statements you are developing.
Please feel free to ask questions over this problem or any other material from chapter 2.
You should use this sheet as your data field and reference these cells on this worksheet in development
of your COGM statement and Income statement.
You should always verify that your problem has been loaded correctly by either going back to the assignment
and clicking on Ok and you should see the file you uploaded and you can also go to view grades and click on
Water Company was organized on January 1 of the current year.
After 5 months of start-up
losses, management expected to earn a profit during May, the most recent month.
Management was disappointed when the income statement for May showed
that losses were still being realized by the company.
May's income statement follows:
For the Month Ended May 31
Less operating expenses:
Insurance Expense(see #2 below)
Rent on facilities (see #1 below)
Selling Salaries Expense
Depreciation, sales equipment
Utilities Expense(see #3 below)
Indirect factory labor
Direct factory labor
Depreciation, factory equipment
Adminstrative supplies used
Administrative Salaries Expense
Management was sure that the company would turn a profit by now.
It has come to their attention that the person who prepared the
income statement did not understand how a manufacturing
Therefore, this person had not factored in the following information.
The building rental
is used by all areas of operations as follows:
76% Rent of facilities applies to factory operation
24% Rent of facilities applies to selling and administration operation
Insurance is used by all areas of operations as follows:
70% Insurance of facilities applies to factory operation
30% Insurance of facilities applies to selling and administration operation
The building utilities is used by all areas of operations as follows:
82% Utilities of facilities applies to factory operation
18% Utilities of facilities applies to selling and administration operation
Inventory balances at the beginning and end of the month were as follows: