Istanbul Company is a manufacturer of computers. Its controller resigned in October 2002. An inexperienced assistant accountant has prepared the following income statement for the month of October 2002.

Prior to October 2002 the company had been profitable every month. The company's president is concerned about the accuracy of the income statement. As his friend, you have been asked to review the income statement and make necessary corrections. After exam- ining other manufacturing cost data, you have acquired additional information as follows.

Instructions

(a) Prepare a schedule of cost of goods manufactured for October 2002.

(b) Prepare a correct income statement for October 2002.

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Sales (net) ISTANBUL COMPANY Income Statement For the Month Ended October 31, 2002 $780,000 Less: Operating expenses Raw materials purchased $260,000 Direct labor cost 190,000 Advertising expense 92,000 Selling and administrative salaries 75,000 Rent on factory facilities 60,000 Depreciation on sales equipment 45,000 Depreciation on factory equipment 35,000 Indirect labor cost 25,000 Utilities expense 12,000 Insurance expense 8,000 802,000 Net loss $(22,000)