ACC3300-Spring 2022 - Chapter 2 Funwork Always show your work when doing funwork! Please make sure to take pictures of your work you wish to submit and paste them to a Word document or a PDF file and submit that to the dropbox. Question 1) Billy Bob's Bikes Corporation is having some issues with their accounting department. They hired some accountants who got their educations at an institution other than Eastern Illinois University. Luckily, Billy Bob found out you were going to Eastern Illinois University and hired you immediately! Billy Bob has asked you to fix the mistakes that the other accountants have made. Below is the information the bad accountants came up with: Billy Bob's Bikes Corporation Income Statement For the Year Ended August 31, 2021 Sales (45 bikes) $ 1,008,800 Less operating expenses: Selling and administrative salaries Advertising Cleaning supplies, factory $ 107,000 200,000 6,000 Indirect labor cost 135,000 Depreciation, office headquarters 18,000 Direct labor costs 80,024 Raw materials purchased 335,000 Maintenance, factory 47,000 Rental cost 90,000 Insurance, factory 9,000 Utilities 40,000 Depreciation, production equipment 75,000 Travel, salespersons 60,000 Net operating loss $1,202,024 $ (193,224) Additional information as of August 31, 2021: They began operations on September 1, 2020 and had zero balances in Raw Materials, Work-in-Process, and Finished Goods on that date. They manufactured 56 bikes during the fiscal year and they all cost the same to manufacture. Ending Work-in-Process was determined to be $26,500. Ten percent of the utilities was used at the headquarters. Ending Raw Materials was determined to be $33,300. Eighty percent of the rental cost was used at the factory. Billy Bob really needs to know if his company is doing as bad as the accountants who went to other University's said he's doing. Can you help him out?? Required: 1. Prepare a schedule of cost of goods manufactured for the year in good form 2. Prepare a corrected income statement for the year in good form. 3. What should Billy Bob do with the accountants who got their educations at institutions not named Eastern Illinois University? Good Form means: show a proper heading, the full statement in detail, and double underline your final answer (similar to what you did in financial accounting for financial statements). See supplemental attachment. Example Company Schedule of Cost of Goods Manufactured For the Year Ended December 31, 20XX Direct materials: Direct materials, January 1 $$$$$ Add: Purchases of direct materials... $$$$$ Direct materials available for use..... $$$$$ Deduct: Direct materials inventory, Dec. 31.... $$$$$ Direct materials used....... $$$$ Direct labor Manufacturing overhead: XXXXX...... XXXXX. XXXXX.. Total overhead costs....... Total manufacturing costs... Add: Work in process inventory, January 1. Deduct: Work in process inventory, Dec. 31...... Cost of goods manufactured Example Company Income Statement $$$$$ $$$$$ $$$$ $$$$ $$$$$ $$$$ Sales................ For the Year Ended December 31, 20XX Cost of goods sold: Finished goods inventory, January 1.. $$$$$ Add: Cost of goods manufactured $$$$ Goods available for sale. $$$$$ Deduct: Finished goods inventory, Dec. 31... $$$$$ Gross margin Selling and administrative expenses: XXXXX...... XXXXX. XXXXX.. Net operating income. $$$$$ $$$$$ $$$$$ $$$$$ $$$$$