Requesting help with the steps/breakdown on solving the below problem. Problem 1
ID: 2447717 • Letter: R
Question
Requesting help with the steps/breakdown on solving the below problem.
Problem 14-7A Manufacturing and income statements; inventory analysis LO P2 A1
The following calendar year-end information is taken from the December 31, 2013, adjusted trial balance and other records of DeLeon Company.
Advertising expense
$28,600
Direct labor
$677,000
Depreciation expense—Office equipment
8,500
Income taxes expense
265,100
Depreciation expense—Selling equipment
10,200
Indirect labor
59,300
Depreciation expense—Factory equipment
34,100
Miscellaneous production costs
11,100
Factory supervision
117,800
Office salaries expense
73,000
Factory supplies used
9,200
Raw materials purchases
952,000
Factory utilities
41,000
Rent expense—Office space
23,000
Inventories
Rent expense—Selling space
25,500
Raw materials, December 31, 2012
166,100
Rent expense—Factory building
77,300
Raw materials, December 31, 2013
195,000
Maintenance expense—Factory equipment
39,000
Goods in process, December 31, 2012
16,200
Sales
4,670,000
Goods in process, December 31, 2013
20,200
Sales discounts
64,900
Finished goods, December 31, 2012
160,800
Sales salaries expense
396,900
Finished goods, December 31, 2013
139,600
1. Prepare the company’s 2013 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses
DE LEON COMPANY
Income Statement
For Year Ended December 31, 2013
Net Sales
0
Cost of goods sold
Goods available for sale
0
Cost of goods sold
0
0
Operating expenses
Selling expenses
Total selling expenses
$0
General and administrative expenses
Total general and administrative expenses
0
Total operating expenses
0
Income before state and federal taxes
0
Net income
$0
Advertising expense
$28,600
Direct labor
$677,000
Depreciation expense—Office equipment
8,500
Income taxes expense
265,100
Depreciation expense—Selling equipment
10,200
Indirect labor
59,300
Depreciation expense—Factory equipment
34,100
Miscellaneous production costs
11,100
Factory supervision
117,800
Office salaries expense
73,000
Factory supplies used
9,200
Raw materials purchases
952,000
Factory utilities
41,000
Rent expense—Office space
23,000
Inventories
Rent expense—Selling space
25,500
Raw materials, December 31, 2012
166,100
Rent expense—Factory building
77,300
Raw materials, December 31, 2013
195,000
Maintenance expense—Factory equipment
39,000
Goods in process, December 31, 2012
16,200
Sales
4,670,000
Goods in process, December 31, 2013
20,200
Sales discounts
64,900
Finished goods, December 31, 2012
160,800
Sales salaries expense
396,900
Finished goods, December 31, 2013
139,600
Explanation / Answer
DE LEON COMPANY
Income Statement
For Year Ended December 31, 2013
Sales
$ 4,670,000
Less: Sales discounts
$ (64,900)
Net Sales
$ 4,605,100
Less: Cost of Goods sold:
Raw materials, December 31, 2012
$ 166,100
Add: Raw materials purchases
$ 952,000
Less: Raw materials, December 31, 2013
$ (195,000)
Raw Material Consumed
$ 923,100
Direct labor
$ 677,000
Factory Overheads:
Depreciation expense—Factory equipment
$ 34,100
Factory supervision
$ 117,800
Factory supplies used
$ 9,200
Factory utilities
$ 41,000
Indirect labor
$ 59,300
Miscellaneous production costs
$ 11,100
Rent expense—Factory building
$ 77,300
Maintenance expense—Factory equipment
$ 39,000
$ 388,800
Total Production Cost
$ 1,988,900
Add: Goods in process, December 31, 2012
$ 16,200
Less: Goods in process, December 31, 2013
$ (20,200)
Cost of Goods Manufactured
$ 1,984,900
Add: Finished goods, December 31, 2012
$ 160,800
Goods available for sale
$ 2,145,700
Less: Finished goods, December 31, 2013
$ (139,600)
Cost of Goods sold
$ 2,006,100
Gross Margin
$ 2,599,000
Less: Operating expenses
Selling Expenses:
Sales salaries expense
$ 396,900
Rent expense—Selling space
$ 25,500
Depreciation expense—Selling equipment
$ 10,200
Advertising expense
$ 28,600
Total Selling Expenses
$ 461,200
General and administrative expenses:
Income taxes expense
$ 265,100
Office salaries expense
$ 73,000
Rent expense—Office space
$ 23,000
Depreciation expense—Office equipment
$ 8,500
Total General and administrative expenses
$ 369,600
Total Operating expenses
$ 830,800
Net Income
$ 1,768,200
DE LEON COMPANY
Income Statement
For Year Ended December 31, 2013
Sales
$ 4,670,000
Less: Sales discounts
$ (64,900)
Net Sales
$ 4,605,100
Less: Cost of Goods sold:
Raw materials, December 31, 2012
$ 166,100
Add: Raw materials purchases
$ 952,000
Less: Raw materials, December 31, 2013
$ (195,000)
Raw Material Consumed
$ 923,100
Direct labor
$ 677,000
Factory Overheads:
Depreciation expense—Factory equipment
$ 34,100
Factory supervision
$ 117,800
Factory supplies used
$ 9,200
Factory utilities
$ 41,000
Indirect labor
$ 59,300
Miscellaneous production costs
$ 11,100
Rent expense—Factory building
$ 77,300
Maintenance expense—Factory equipment
$ 39,000
$ 388,800
Total Production Cost
$ 1,988,900
Add: Goods in process, December 31, 2012
$ 16,200
Less: Goods in process, December 31, 2013
$ (20,200)
Cost of Goods Manufactured
$ 1,984,900
Add: Finished goods, December 31, 2012
$ 160,800
Goods available for sale
$ 2,145,700
Less: Finished goods, December 31, 2013
$ (139,600)
Cost of Goods sold
$ 2,006,100
Gross Margin
$ 2,599,000
Less: Operating expenses
Selling Expenses:
Sales salaries expense
$ 396,900
Rent expense—Selling space
$ 25,500
Depreciation expense—Selling equipment
$ 10,200
Advertising expense
$ 28,600
Total Selling Expenses
$ 461,200
General and administrative expenses:
Income taxes expense
$ 265,100
Office salaries expense
$ 73,000
Rent expense—Office space
$ 23,000
Depreciation expense—Office equipment
$ 8,500
Total General and administrative expenses
$ 369,600
Total Operating expenses
$ 830,800
Net Income
$ 1,768,200
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.