Required information Problem 143A Schedule of cost of goods

Required information

Problem 14-3A Schedule of cost of goods manufactured and income statement; inventory analysis LO P2, A1

[The following information applies to the questions displayed below.]
   

The following calendar year-end information is taken from the December 31, 2017, adjusted trial balance and other records of Leone Company.
   

Problem 14-3A Part 2

2. Prepare the company’s 2017 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.

Advertising expense	$	26,500		Direct labor	$	675,700
Depreciation expense—Office equipment		11,100		Income taxes expense		297,800
Depreciation expense—Selling equipment		10,700		Indirect labor		56,900
Depreciation expense—Factory equipment		35,800		Miscellaneous production costs		10,400
Factory supervision		126,600		Office salaries expense		69,000
Factory supplies used		7,800		Raw materials purchases		937,000
Factory utilities		43,000		Rent expense—Office space		21,000
Inventories				Rent expense—Selling space		27,900
Raw materials, December 31, 2016		164,100		Rent expense—Factory building		81,200
Raw materials, December 31, 2017		189,000		Maintenance expense—Factory equipment		37,400
Work in process, December 31, 2016		17,900		Sales		4,565,700
Work in process, December 31, 2017		22,900		Sales salaries expense		399,500
Finished goods, December 31, 2016		167,900
Finished goods, December 31, 2017		136,200

Solution

Schedule of cost of goods manufactured Direct materials Raw materials inventory,December 31,2016 164,100 Raw materials purchase 937,000 Raw materials available for use 1,101,100 less:Raw materials inventory,Decemenr 31,2017 189,000 Direct materials used 912,100 Direct labor 675,700 Factory overhead Depreciation expense-factory equipment 35,800 Factory supervision 126,600 Factory supplies used 7,800 Factory utilities 43,000 Rent expense-factory building 81,200 maintenance expense-factory equipment 37,400 miscellaneous production costs 10,400 indirect labor 56,900 total factory overhead costs 399,100 total manufacturing costs 1,986,900 add:work in process inventory,december 31,2016 17,900 total cost of work in procese 2,004,800 less:work in process inventory,December 31,2017 22,900 cost of goods manufactured 1,981,900 Income Statement Sales 4,565,700 Cost of goods sold cost of goods manufactured 1,981,900 Finished goods inventory,December 31,2016 167,900 goods available for sale 2,149,800 less:finished goods inventory,december 31,2017 136,200 Cost of goods sold 2,013,600 Gross profit from sales 2,552,100 operating expense Selling expense Depreciation expense -Selling equipment 10,700 Rent expense -selling space 27,900 Sales salaries expense 399,500 Advertising expense 26,500 Total selling expense 464,600 General and administrative expense Depreciation expense-office equipment 11,100 office salaries expense 69,000 Rent expense-office space 21,000 total general and administrative expene 101,100 total operating expense 565,700 income before taxes 1,986,400 income taxes expense 297,800 net income 1,688,600