Required information The following selected account balances

Required information The following selected account balances are provided for Delray Mfg Sales Raw materials inventory, Dec. 31, 2016 Work in process inventory, Dec. 31, 2016 Finished goods inventory, Dec. 31, 2016 Raw materials purchases Direct labor Factory computer supplies used Indirect labor Repairs-Factory equipment Rent cost of factory building Advertising expense General and administrative expenses Raw materials inventory, Dec. 31, 2017 Work in process inventory, Dec. 31, 2017 Finished goods inventory $ 1,084,000 40,000 53,300 63,600 196,500 222,000 23,200 47,000 5,250 57,000 107,000 126,000 42,500 38,700 65,100 Dec. 31, 2017

Solution

Solution:

Preparing an Income Statement for Delray Mfg:

DELRAY MFG.

Income Statement

For Year Ended December 31, 2017

* Calculation of the Cost of Goods Manufactured:

DELRAY MFG. Income Statement For Year Ended December 31, 2017
Sales		$1,084,000
Less: Cost of Goods Sold
Finished goods inventory, December 31,2016	$63,600
Add: Cost of goods manufactured	$563,050*
Cost of goods available for sale	$626,650
Less: Finished goods inventory, December 31, 2017	($65,100)
Cost of goods sold for 2017		($561,550)
Gross profit		$522,450
Less: Operating expenses
Advertising expenses	$107,000
General and administrative expenses	$126,000
Total operating expenses		($233,000)
Operating income		$289,450