EX 18-9 Financial statements of a manufacturing firm OBJ.3 The following events

Question

EX 18-9 Financial statements of a manufacturing firm OBJ.3 The following events took place for Video Wave Manufacturing Company during Januarv 2016, the first month of its operations as a producer of digital video monitors: a. Purchased $133,200 of materials. b. Used $94,080 of direct materials in production. c. Incurred $180,320 of direct labor wages. d. Incurred $211,680 of factory overhead. e. Transferred $425,320 of work in process to finished goods. f. Sold goods with a cost of $365,000. g. Earned revenues of $652,000. h. Incurred $86,520 of selling expense. i. Incurred $71,250 of administrative expense Using the information given, complete the following a. Prepare the January 2016 income statement for Video Wave Manufacturing Company. b. Determine the inventory balances at the end of the first month of operations.

Explanation / Answer

Req A: STATEMENT OF INCOME PARTICULARS AMOUNT IN $ Sales Revenue 652,000 Less: Cost of Good sold (Given) 365,000 Gross Margin 287,000 Less: Expenses     Selling expense 86,520     Admin expense 71,250 Net Income earned during the period 129,230 Req B: Raw Material Inventory: Purchase during the year 133200 Less: Issued during the production -94080 Ending balance of Rraw material Inventory 39120 Work in Process Inventory: Raw material inventory as Direct Material(Direct material consumed) 94080 Direct wages incurred 180320 Manufacturing overheads 211680 Total Manufacturing cost incurred 486080 Less: Cost of goods manufactured -425320 Ending Inventory of Work in process 60760 Finished Goods inventory: Cost of Goods manufacatured 425320 Less: Cost of Goods sold -365000 Ending Inventory off Finished Goods 60320 Ending Inventory Raw material 39120 Work in process 60760 Finished Goods 60320

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