Business BackgroundRich watched his mom making cakes for the Jewish holidays since he was a kid. He even faked being sick so he could stay home and smell the delicious aroma of cinnamon, brown sugar and the yeast dough as it came out of the oven. Lots of people in the neighborhood came over before the holidays to put in their orders. Mom had learned from her mom and had all the recipes written on 3 x 5 index cards in case Rich or his brother wanted them.Richs dad encouraged him to become an accountant because a profession would provide a solid income and career opportunities. The problem is, he hated Accounting. Well, maybe hate is too strong a word, but it wasnt what he enjoyed doing. He was a cook.One day in Managerial Accounting class, Rich made a decision. He was going to quit school at the end of the semester and open up a bakery specializing in his moms cakes. He anticipated that most of his business would be based on special order, customized cakes. He figured he could service family weekend gatherings, birthday and weddings celebrations, and, of course, the Jewish New Year celebrations. Although most of the baking would be to order, he would maintain a limited inventory for drop in customers.In December of 2016, he left school, created a business plan, and incorporated S & S Bakery. The plan was to open for business on January 1, 2017. He would use the $50,000 his dad left him when he passed away two years earlier as start up capital and pay himself a minimum salary of $500 month for the first year. His friend Maria, a marketing executive with her own firm, agreed to provide marketing support for a cake a year.He found a location in Valencia close to a well known Hebrew school. The storefront was on Copperhill Drive, a busy street with a Starbucks and several restaurants. The landlord was impressed with his initiative and agreed to pay for all the leasehold improvements and charge $600 a monthT Accounts

Materials Inventory					Work in progress
$0.00				Beg. Bal		$4,779.00
$600.00	$150.00	Indirect Materials		DM	$1,579.00
$120.00	$1,579.00	Direct Materials		Michelle/Jen	$2,400.00
$120.00				MOH	$800.00
$134.00				Ending Bal.	$0.00
$325.00
$400.00					Cash
$30.00				Beg. Bal	$0.00
$0.00				Sales	$10,000.00	$3,100.00	Wages Paid
						$50.00	Mobile Phone
						$12.00	Cash Register
S & A Expenses						$1,729.00	Materials
$0.00				Ending Bal.	$5,109.00
$500.00
$100.00					Accounts Payable
$50.00				Beg. Bal	$0.00
$12.00						$1,729.00	Materials
$662.00						$12.00	Cash Register
						$50.00	Phone
Manufacturing Overhead				Ending Bal.		$1,791.00
$0.00
$120.00	$800.00	MOH			Finished Goods
$50.00	$200.00	Under applied		Beg. Bal	$0.00
$600.00				COGS	$4,779.00	$4,779.00	COGS
$30.00				Ending Bal.	$0.00
$100.00
$100.00					Accumulation Depreciaiton
$0.00				Beg. Bal	$0.00
						$100.00	Depreciation
Salaries Payable				Ending Bal.		$100.00
$0.00
$500.00

Sales for January are $10,000 ( They sold 200 cakes at an average of $50 each)

(Assignment #4 to be completed in Excel)Rich doesnt want to see journal entries and T-accounts. However, he is interested in seeing a Statement of Cost of Goods Manufactured. He thinks a business owner should see the information that way.

***Required: Prepare the Statement of Cost of Goods Manufactures for January. Also, prepare an Income statement for the month of January.***

Assignment #4

Statement of Cost of Goods Manufactured For the month ended 1/31/2017

Direct Materials

Raw Material

Add:Purchases of Raw Materials

Raw Material Available for use

Deduct Ending Raw Materials

Raw Material used in production

Direct Labor

Manufacturing Overhead

Total Manufacturing cost

Add beginning WIP

Deduct Ending Wip

Cost of goods manufactured

Income Statement

Sale

COGS

Gross Margin

Expenses:

Cash Register

Salary Expense

Acct Expense

Total Expense

Net Income