DrumBeats of Scottsdale manufacture drum sets. The following information is avai

Question

DrumBeats of Scottsdale manufacture drum sets. The following information is available for December 318t, 20x5. Advertising Expense Depreciation Expense, office Equipment Depreciation Expense, Selling Equipment Depreciation Expense, Factory Equipment Factory Supervisiorn Factory Supplies Factory Utilities Raw Materials Inventory, Dec 31, 20x4 Raw Materials Inventory, Dec 31, 20x5 Goods in Process, Dec 31, 20x4 Goods in Process, Dec 31, 20x5 Finished Goods, Dec 31, 20x4 Finished Goods, Dec 31, 20x5 Direct Labor Income Tax Expense Indirect Labor Miscellaneous Production Costs Office Salaries Expense Raw Materials Purchases Rent Expense, Office Space Rent Expense, Selling Space Rent Expense, Factory Building Maintenance Expense, Factory Equipment Sales Sales Discounts Sales Salaries Expense $ 19,125 8,750 10,000 32,500 122,500 15,750 36,250 177,500 168,125 15,875 14,000 164,375 129,000 650,750 277,425 60,000 8,500 100,875 872,500 21,125 25,750 79,750 27,875 3,275,000 57,500 268,250 Used 1. Prepare DrumBeats 20x5 Manufacturing Statement. 2. Prepare DrumBeats 20x5 Common-Sized Income Statement that reports separate categories for Selling Expenses and General & Administrative Expenses.

Explanation / Answer

DrumBeats Manufacturing Statement For the year ended December 31, 20x5 Direct materials Consumed Beginning Raw Materials , January 1            1,77,500 Add: Raw Material Purchases            8,72,500 Total Raw Materials Available for use          10,50,000 Less: Ending Raw Materials , December 31           -1,68,125 Raw material used in production               8,81,875 Direct Labour               6,50,750 Factory overhead Depreciation expense- Factory equipment                32,500 Indirect Labour                60,000 Factory Supervision            1,22,500 Factory Supplies used                15,750 Factory Utilities                36,250 Rent Expense -Factory                79,750 Miscellaneous Production Costs                  8,500 Maintenance Expense , Factory Building                27,875 Total Factory costs               3,83,125 Total Manfucature costs incurred in 20x5            19,15,750 Add : Begining Work In progess, January 1                  15,875 Total manufacturing costs            19,31,625 Less :Ending Work In progess, December 31                 -14,000 Cost Goods Manufactured            19,17,625 DrumBeats Manufacturing Statement For the year ended December 31, 20x5 Sales    32,75,000 Less: Cost of Goods Sold Cost Goods Manufactured            19,17,625 Add : Beginning Finshed Goods, January 1               1,64,375 Finished Goods Available for Sale            20,82,000 Less: Ending Finshed Goods, December 31             -1,29,000 Cost of Goods Sold    19,53,000 Gross Income    13,22,000 Less: Operating expenses General & Adminstrative Expenses Depreciation expense- office equipment                  8,750 Office Salaries Expense            1,00,875 Rent Expense -Office                21,125               1,30,750 Selling Expenses: Advertising expenses                19,125 Depreciation expense- Selling equipment                10,000 Rent Expense -Selling Space                25,750 Sales Discounts                57,500 Sales Salaries Expense            2,68,250               3,80,625 Total Operating Expenses     -5,11,375 Operating Income (EBIT)      8,10,625 Less: Interest Expense                   -   Operating income before Taxes      8,10,625 Less: Income Tax Expense     -2,77,425 Net Income      5,33,200

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