Problem 3 Textbook Reference Good Vibrations Inc you to sort

Problem 3 (Textbook Reference: Good Vibrations, Inc., you to sort through th data from records prepared by Good Vibrations, Inc., for the year ended December 31, 2013: P2-3)-Prepare statement of costs of goods manufactured and an income statement produces recordings of musical performances. A newly hired executive of the company has asked e records and prepare a statement of the company\'s cost of goods manufactured. You find the following Beginning Direct Materials Inventory, January 1, 2013 6,000 Ending Direct Materials Inventory, December, 31, 2013 $10,500 Beginning Work in Process Inventory, January 1, 2013 $10,000 Ending Work in Process Inventory, December 1, 2013 $ 9,500 50,000 $40,000 $ 15,000 7,000 s 5,000 $14,000 $10,500 S25,000 $76,500 Materials Purchases Direct Labor Indirect Labor Factory Utilities Expense Factory Supplies Expense Depreciation Expense- Factory Building Depreciation Expense-Factory Equipment Other Manufacturing Overhead Applied Manufacturing Overhead You also learn that Beginning Finished Goods Inventory on January 1, 2013, was $20,000 and Ending Finished Goods Inventory administrative expenses were $75,000 on December 31, 2013, was $5,000. Sales for the year were $400,000. Selling expenses were $50,000 and Required: Prepare a statement of cost of goods manufactured for Good Vibrations, Inc., for the year ended December 31, 2013. (uint: Use the space below to recreate the T-Account Template we made together in class) b. Prepare an income statement for Good Vibrations, Inc, for the year ended December 31, 2013. Templates for (a) and (b) have been provided on the next page

Solution

a) Good Vibrations Statement of Cost of Goods Manufactured For the year ended December 31, 2013 Direct materials: Materials inventory, January 1 $6,000.00 Plus : Materials purchases $50,000.00 Materials available for sale for use $56,000.00 Less: Materials inventory, December 31 $10,500.00 Direct materials used $45,500.00 Direct labor $40,000.00 Manufacturing overhead: Indirect labor $15,000.00 Factory utilities expense $7,000.00 Factory supplies expense $5,000.00 Depreciation expense – factory building $14,000.00 Depreciation expense – Factory Equipment $10,500.00 Other manufacturing overhead $25,000.00 Total Applied manufacturing overhead $76,500.00 Cost to manufacture (DM + DL + MOH) $162,000.00 Plus: Work in process inventory, January 1 $10,000.00 Less : Work in process inventory, December 31 $9,500.00 Cost of goods manufactured $162,500.00 b) Good Vibrations Income Statement For the year ended December 31, 2013 Sales $400,000.00 Less: Cost of goods sold Finished goods inventory, January 1 $20,000.00 Cost of goods manufactured $162,500.00 Cost of goods available for sale $182,500.00 Less: Finished goods inventory, December 31 $5,000.00 Cost of goods sold $177,500.00 Gross Margin $222,500.00 Less: Operating expenses: Selling expenses $50,000.00 Administrative expenses $75,000.00 Total operating expenses $125,000.00 Operating Income $97,500.00