Quintana
Company is a manufacturer of toys. Its controller resigned in August 2012. An
inexperienced assistant accountant has prepared the following income statement
for the month of August 2012.
P19-5B Quintana
Company is a manufacturer of toys. Its controller resigned in August 2012. An
inexperienced assistant accountant has prepared the following income statement
for the month of August 2012.
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QUINTANA
COMPANY
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Income Statement
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For the Month Ended August 31, 2012
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Sales (net)
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$675,000
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Less: Operating expenses
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Raw materials purchases
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$220,000
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Direct labor cost
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160,000
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Advertising expense
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75,000
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Selling and administrative salaries
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70,000
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Rent on factory facilities
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60,000
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Depreciation on sales equipment
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50,000
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Depreciation on factory equipment
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35,000
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Indirect labor cost
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20,000
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Utilities expense
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10,000
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Insurance expense
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5,000
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705,000
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Net loss
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($30,000)
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Prior to
August 2012 the company had been profitable every month. The company’s
president is concerned about the accuracy of the income statement. As her
friend, you have been asked to review the income statement and make necessary
corrections. After examining other manufacturing cost data, you have acquired
additional information as follows.
1.
Inventory balances at the beginning and end of August were:
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August 1
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August 31
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Raw materials
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$19,500
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$30,000
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Work in process
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25,000
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21,000
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Finished goods
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40,000
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59,000
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2. Only 50%
of the utilities expense and 70% of the insurance expense apply to factory
operations. The
remaining amounts should be charged to selling and administrative activities.
Instructions
(a) Prepare a schedule of cost of goods manufactured
for August 2012.
(b) Prepare a correct income statement for August 2012
TUTORIAL PREVIEW
(a) Prepare a schedule of cost of goods manufactured
for August 2012.
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QUINTANA
COMPANY
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Cost of Goods Manufactured Schedule
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For the Month Ended August 31, 2012
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Work in process, August 1
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$25,000
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Direct materials
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Raw material inventory, August 1
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$19,500
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Raw materials purchases
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220,000
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Total raw materials available for use
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239,500
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File name: P19-5B Quintana File type: xls PRICE: $6
