Managerial Accounting (5th Edition)
5th Edition
ISBN: 9780134128528
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 2.49BP
Prepare income statements (Learning Objective 5)
Part One: In 2015, Fran Lexa opened Fran’s Flowers, a small shop selling floral arrangements. On December 31, 2016, her accounting records show the following:
| Sales revenue | $53,000 |
| Utilities for shop | $1,000 |
| Inventory on December 31, 2016 | $9,200 |
| Inventory on January 1, 2016 | $12,600 |
| Rent for shop | $4,400 |
| Sales commissions | $4,100 |
| Purchases of merchandise | $38,000 |
Requirement
Prepare an income statement for Fran’s Flowers, a merchandiser, for the year ended December 31, 2016.
Part Two: Fran’s Flowers succeeded so well that Fran decided to manufacture her own brand of floral supplies: Floral Place Manufacturing. At the end of December 2017 her accounting records show the following:
| Utilities for plant | $4,300 |
| Delivery expense | $3,800 |
| Sales salaries expense | $4,800 |
| Plant janitorial services | $1,250 |
| Work in process inventory, December 31, 2017 | $4,000 |
| Finished goods inventory, December 31, 2016 | 0 |
| Finished goods inventory, December 31, 2017 | $4,500 |
| Sales revenue | $109,000 |
| Customer service hotline expense | $1,700 |
| Direct labor | $22,000 |
| Direct material purchases | $31,000 |
| Rent on manufacturing plant | $9,400 |
| Raw materials inventory, December 31, 2016 | $18,000 |
| Raw materials inventory, December 31, 2017 | $7,500 |
| Work in process inventory, December 31, 2016 | 0 |
Requirements
- 1. Calculate the cost of goods manufactured for Floral Place Manufacturing for the year ended December 31, 2017.
- 2. Prepare an income statement for Floral Place Manufacturing for the year ended December 31, 2017.
- 3. How does the format of the income statement for Floral Place Manufacturing differ from the income statement of Fran’s Flowers?
Part Three:
Show the ending inventories that would appear on these balance sheets:
- 1. Fran’s Flowers at December 31, 2016.
- 2. Floral Place Manufacturing at December 31, 2017.
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During the current year, merchandise is sold for $135,100 cash and $501,500 on account. The cost of the goods sold is $458,400. What is the amount of the gross profit?
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Chapter 2 Solutions
Managerial Accounting (5th Edition)
Ch. 2 - (Learning Objective 1) Which of the following...Ch. 2 - (Learning Objective 2) Which of the following is...Ch. 2 - (Learning Objective 3) A cost that can be traced...Ch. 2 - (Learning Objective 4) Period costs are often...Ch. 2 - (Learning Objective 4) Conversion costs consist of...Ch. 2 - (Learning Objective 4) Which of the following is...Ch. 2 - Prob. 7QCCh. 2 - (Learning Objective 5) Which of the following...Ch. 2 - Prob. 9QCCh. 2 - Prob. 10QC
Ch. 2 - Short Exercises S2-1 Identify types of companies...Ch. 2 - Identify type of company from balance sheets...Ch. 2 - Classify costs by value chain function (Learning...Ch. 2 - Classify costs as direct or indirect (Learning...Ch. 2 - Prime costs Cost objects Product costs Assigned...Ch. 2 - Prob. 2.6SECh. 2 - Classify product costs and period costs (Learning...Ch. 2 - Classify a manufacturers costs (Learning Objective...Ch. 2 - Classify costs incurred by a dairy processing...Ch. 2 - Determine total manufacturing overhead (Learning...Ch. 2 - Prepare a retailers income statement (Learning...Ch. 2 - Compute Cost of Goods Sold for a merchandiser...Ch. 2 - Calculate direct materials used (Learning...Ch. 2 - Compute Cost of Goods Manufactured (Learning...Ch. 2 - Describe other cost terms (Learning Objectives 6...Ch. 2 - Classify costs as fixed or variable (Learning...Ch. 2 - Prob. 2.17SECh. 2 - Classify costs along the value chain for a...Ch. 2 - Classify costs along the value chain for a...Ch. 2 - Value chain and sustainability efforts (Learning...Ch. 2 - Prob. 2.21AECh. 2 - Construct an income statement using product and...Ch. 2 - Work backward to find missing amounts (Learning...Ch. 2 - Prepare a retailers income statement (Learning...Ch. 2 - Compute direct materials used and Cost of Goods...Ch. 2 - Compute Cost of Goods Manufactured and Cost of...Ch. 2 - Continues E2-26A: Prepare income statement...Ch. 2 - Determine whether information is relevant...Ch. 2 - Prob. 2.29AECh. 2 - Classify costs along the value chain for a...Ch. 2 - Classify costs along the value chain for a...Ch. 2 - Value chain and sustainability efforts (Learning...Ch. 2 - Classify and calculate a manufacturers costs...Ch. 2 - Construct an income statement using product and...Ch. 2 - Work backward to find missing amounts (Learning...Ch. 2 - Prob. 2.36BECh. 2 - Compute direct materials used and Cost of Goods...Ch. 2 - Compute Cost of Goods Manufactured and Cost of...Ch. 2 - Continues E2-38B: Prepare income statement...Ch. 2 - Determine whether information is relevant...Ch. 2 - Prob. 2.41BECh. 2 - Classify costs along the value chain (Learning...Ch. 2 - Determine ending inventory balances (Learning...Ch. 2 - Prepare income statements (Learning Objective 5)...Ch. 2 - Prob. 2.45APCh. 2 - Prob. 2.46APCh. 2 - Classify costs along the value chain (Learning...Ch. 2 - Determine ending inventory balances (Learning...Ch. 2 - Prepare income statements (Learning Objective 5)...Ch. 2 - Prob. 2.50BPCh. 2 - Prob. 2.51BPCh. 2 - Calculate operating income (Learning Objective 5)...Ch. 2 - Prob. 2.53ACT
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