Concept explainers
a.
Income statement:
The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a
Material Inventory:
Material inventory comprises of the direct material costs, and indirect material costs that have not entered into the process of manufacturing.
Work in process Inventory:
Work in process inventory comprises of the direct material costs, direct labor
Finished goods Inventory:
Finished goods inventory comprises of the finished products that are completed manufacturing, but have not been sold.
To prepare: The March income statement for the Company DVM.
b.
The materials inventory, work in process inventory, and finished goods inventory balances at the end of the first month of operations.
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- Glasson Manufacturing Co. produces only one product. You have obtained the following information from the corporations books and records for the current year ended December 31, 2016: a. Total manufacturing cost during the year was 1,000,000, including direct materials, direct labor, and factory overhead. b. Cost of goods manufactured during the year was 970,000. c. Factory Overhead charged to Work in Process was 75% of direct labor cost and 27% of the total manufacturing cost. d. The beginning Work in Process inventory, on January 1, was 40% of the ending Work in Process inventory, on December 31. e. Material purchases were 400,000 and the ending balance in Materials inventory was 60,000. No indirect materials were used in production. Required: Prepare a statement of cost of goods manufactured for the year ended December 31 for Glasson Manufacturing. (Hint: Set up a statement of cost of goods manufactured, putting the given information in the appropriate spaces and solving for the unknown information.)arrow_forwardThe following events took place for Rushmore Biking Inc. during February, the first month of operations as a producer of road bikes: Purchased 480,000 of materials. Used 434,500 of direct materials in production. Incurred 125,000 of direct labor wages. Applied factory overhead at a rate of 40% of direct labor cost. Transferred 578,000 of work in process to finished goods. Sold goods with a cost of 550,000. Revenues earned by selling bikes, 910,000. Incurred 185,000 of selling expenses. Incurred 90,000 of administrative expenses. a. Prepare the income statement for Rushmore Biking for the month ending February 28. b. Determine the inventory balances on February 28, the end of the first month of operations.arrow_forwardEllerson Company provided the following information for the last calendar year: During the year, direct materials purchases amounted to 278,000, direct labor cost was 189,000, and overhead cost was 523,000. During the year, 100,000 units were completed. Refer to Exercise 2.21. Last calendar year, Ellerson recognized revenue of 1,312,000 and had selling and administrative expenses of 204,600. Required: 1. What is the cost of goods sold for last year? 2. Prepare an income statement for Ellerson for last year.arrow_forward
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