At May 31, 2005, the accounts of Yellow Knife Manufacturing Company show the fol

Question

At May 31, 2005, the accounts of Yellow Knife Manufacturing Company show the following.

May 1 inventories—finished goods $12,600, work in process $14,700, and raw materials $8,200
May 31 inventories—finished goods $11,500, work in process $17,900, and raw materials $7,100.
Debit postings to work in process were: direct materials $62,400, direct labor $32,000, and manufacturing overhead applied $48,000.
Sales totaled $200,000.


Prepare a condensed cost of goods manufactured schedule.
Prepare an income statement for May through gross profit.
Indicate the balance sheet presentation of the manufacturing inventories at May 31, 2005

Explanation / Answer

Raw material purchase = closing balance + transferred to WIP - opening

= 7,100+ 62,400-8,200 = 61,300

Work in process transferred to Finished goods = 14,700+62,400+32,000+48,000-17,900

= 139,200

Finished goods sold = opening + transfer from WIP - closing

= 12,600+139,200-11,500

= 140,300

Therefore cost of goods manufactured = $140,300

Income statement

Sales = 200,000

Less: cost of goods sold = 140,300

Gross profit = 59,700

Balance sheet as on 31st may

Inventories:

Raw materials $7,100

Work in process $17,900

Finished goods $11,500

$36,500

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