Margaret Rosenthal, accountant for Russell Manufacturing Company, prepared the following income statement for the quarter ending December 31, 2016.

Sales.................................................................$1,367,600Purchases of materials (1)..................................245,640Payroll (2)..............................................................266,786Advertising..............................................................37,000Administrative travel.............................................27,600Manufacturing utilities..........................................49,400Facility rental (3).....................................................90,000Depreciation (4)......................................................63,500Sales commissions.................................................41,000Annual insurance (manufacturing).......................40,000Office utilities...........................................................22,400Management salaries (5)......................................388,000Net income............................................................$ 96,274

Furthermore Rosenthal compiled the following information with respect to inventories for the quarter (note that the company does not maintain inventories of indirect materials).

Required:

1. Identify the conceptual errors, if any, in the quarterly income statement presented above.

2. Prepare a cost of goods manufactured statement for the quarter.

3. Prepare a revised income statement for the quarter.

Transcribed Image Text:

Beginning $ 6,870 8,070 Ending Direct materials $7,860 Work-in-progress Finished goods 9,120 11,280 7,420