E1414 The following information is available for Aikman Comp

E14-14 The following information is available for Aikman Company Prepare a cost of goods manufactured schedule and a partial income statement. (LO 3), AP January 1, 2017 2017 December 31, 2017 Raw materials inventory Work in process inventory Finished goods inventory Materials purchased Direct labor Manufacturing overhead Sales revenue $21,000 13,500 27,000 $30,000 17,200 21,000 $150,000 220,000 180,000 910,000 Instructions (a) Compute cost of goods manufactured. (b) Prepare an income statement through gross profit. (c) Show the presentation of the ending inventories on the December 31, 2017, balance sheet. (d) How would the income statement and balance sheet of a merchandising company be different from Aikman\'s financial statements?

Solution

An income statement reflects your small-business earnings and shows all the expenses incurred in generating that income. If your small business is a manufacturing company, you will show different categories of expenses than you would for a merchandising company. The merchandiserrefers to expenses as “cost of goods sold.” Manufacturers often refer to expenses and “cost of goods manufactured.” The income statements for each of these types of companies may reflect this terminology

	Aikman Company
cost of goods manufactured Schedule
work in process inventory,January 2017				13,500
Raw materials used
Raw materials inventory ,Jan 1,2017		21,000
materials purchased			150,000
cost of raw materials avaialble			171,000
less :	Raw materials inventory,dec 31 2017	30,000
Raw materials used					141,000
direct labor					220,000
manufacturing overhead				180,000
total manufacturing cost					541,000
total manufacturing cost & work in process			554,500
less:	work in process ,december 31 ,2017			17,200
	cost of goods manufactured				537,300
	Income statement (partial)
Sales						910,000
cost of goods sold
finished goods,Jan 1			27,000
cost of goods manufactured			537,300
cost of goods avaialble for sales		564,300
less:finished goods ,dec 31			21,000
cost of goods sold					543,300
Gross profit					366,700
	Balance sheet (partial)
Current Assets
inventories
Finished goods				21,000
work in process inventory			17,200
Raw materials inventory			30,000
						68,200