Working note particulars amount opening balance 35000

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Working note: Particulars Amount
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Opening balance $35,000 Add: Cost of direct materials used $245,000 Direct labor cost applied $120,000 Manufacturing overhead $400,000 Sub-total $800,000 Less: Transferred to finished goods -$700,000 Balance at year end $100,000 EXERCISE 16.7 Manipulating Accounting Figures Joe Felan is the production manager at Utex Corporation. He was recently quoted as saying, “Since management reports aren’t subject to generally accepted accounting principles, and they aren’t directly used by outside investors and creditors, it’s really okay for managers to manipulate the reports as they see fit.” Do you agree with Felan’s statement? Defend your answer. I do not agree with Felan’s statement. It is because the reports should be as it is to see the real picture of the business. When a true position of business is shown in its various reports, the business can be improved where it needs to. True reflection helps the business do better in the future and keep track of everything. Manipulation of management reports may be considered unethical as well. EXERCISE 16.10 Preparing an Income Statement Using the Cost of Finished Goods Manufactured Randolph Company reports the following information pertaining to its operating activities. Ending Balance Beginning Balance Materials Inventory $70,000 $60,000
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Work in Process Inventory 41,000 79,000 Finished Goods Inventory 16,000 21,000 During the year, the company purchased $135,000 of direct materials and incurred $22,000 of direct labor costs. Total manufacturing overhead costs for the year amounted to $19,000. Selling and administrative expenses amounted to $30,000, and the company’s annual sales amounted to $280,000. a. Prepare Randolph’s schedule of the cost of finished goods manufactured. b. Prepare Randolph’s income statement (ignore income taxes). Cost of finished goods manufactured: Beginning work in process inventory 79,000 Add: Direct material cost Beginning material inventory 60,000 Material purchased: 135,000 Ending material inventory: (70,000) Add: Direct material cost 125,000 Add: Direct labor cost 22,000 Add: Overhead manufacturing cost 19,000 Less: Ending work in process inventory 41000 Cost of finished goods manufactured $204,000 Income Statement: Particulars Amount ($) Amount ($) Annual sales 280,000 Less: Cost of goods sold Finished goods in inventory, beginning of the year 21,000 Cost of finished goods manufactured 204,000 Less: Finished goods, ending (16000) Cost of goods sold 209,000 Gross Profit 71,000 Less: Selling and administrative expenses (30,000) Net profit 41000
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EXERCISE 16.13 Classifying Costs
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  • Spring '14
  • Finished Goods

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