4-43 Financial Statements for Manufacturing and Merchandising Companies Outdoor Equipment Company (MER) and Mountain Supplies, Inc. (MFG) both sell tents. MER purchases its tents from a manufacturer for $90 each and sells them for $120. It purchased 10,000 tents last year. MFG produces its own tents. Last year, MFG produced 10,000 tents. Costs were as follows: Direct materials used DM Direct labor DL Indirect manufacturing: OH $535,000 $520,000 260,000 Depreciation Indirect labor Other $40,000 50,000 .30.000 20.000 $900,000 Total cost of production Assume that MFG had no beginning inventory of direct materials. There was no beginning inventory of finished tents, but ending inventory consisted of 1,000 finished tents. Ending Work In process inventory was negligible. Each company sold 9,000 tents for $1,080,000 last year and incurred the following selling and administrative costs: Sales salaries and commissions Depreciation on retail store Advertising Other Total selling and administrative cost $ 90,000 30,000 20,000 10,000 $150,000 1. Using the diagram on page 30, determine the inventory account(s) and amount(s) for MER.G 2. Using the diagram on page 31, determine the inventory account(s) and amount(s) for MFG. 3. Prepare a simplified income statement for MER for last year. 4. Prepare a simplified income statement for MFG for last year. 4-43 Financial Statements for Manufacturing and Merchandising Companies Outdoor Equipment Company (MER) and Mountain Supplies, Inc. (MFG) both sell tents. MER purchases its tents from a manufacturer for $90 each and sells them for $120. It purchased 10,000 tents last year. MFG produces its own tents. Last year, MFG produced 10,000 tents. Costs were as follows: Direct materials used DM Direct labor DL Indirect manufacturing: OH $535,000 $520,000 260,000 Depreciation Indirect labor Other $40,000 50,000 .30.000 20.000 $900,000 Total cost of production Assume that MFG had no beginning inventory of direct materials. There was no beginning inventory of finished tents, but ending inventory consisted of 1,000 finished tents. Ending Work In process inventory was negligible. Each company sold 9,000 tents for $1,080,000 last year and incurred the following selling and administrative costs: Sales salaries and commissions Depreciation on retail store Advertising Other Total selling and administrative cost $ 90,000 30,000 20,000 10,000 $150,000 1. Using the diagram on page 30, determine the inventory account(s) and amount(s) for MER.G 2. Using the diagram on page 31, determine the inventory account(s) and amount(s) for MFG. 3. Prepare a simplified income statement for MER for last year. 4. Prepare a simplified income statement for MFG for last year