Agler Company is a manufacturer of toys. Its controller resigned in August 2022. An inexperienced assistant accountant has prepared the following income statement for the month of August 2022. 

Prior to August 2022, the company had been profitable every month. The company’s president is concerned about the accuracy of the income statement. As her friend, she has asked you to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired the following additional information. 

1. Inventory balances at the beginning and end of August were as follows:

2. Only 50% of the utilities expense and 70% of the insurance expense apply to factory operations; the remaining amounts should be charged to selling and administrative activities. 

Instructions 

a. Prepare a cost of goods manufactured schedule for August 2022.

b. Prepare a correct income statement for August 2022.

Transcribed Image Text:

AGLER COMPANY Income Statement For the Month Ended August 31, 2022 Sales (net) Less: Operating expenses Raw materials purchases Direct labour cost Advertising expense Selling and administrative salaries Rent on factory facilities Depreciation on sales equipment Depreciation on factory equipment Indirect labour cost Utilities expense Insurance expense Net loss $200,000 160,000 75,000 70,000 60,000 50,000 35,000 20,000 10,000 5,000 $675,000 685,000 $ (10,000)