Empire Company is a manufacturer of smart phones. Its controller resigned in October 2017 An inexperienced assistant accountant has prepared the following income statement for the month of October 2017. EMPIRE COMPANY income Statement For the Month Ended October 31, 2017 $780,000 Sales Revenue Less: Operating Expenses Raw materials purchases Direct labor costs Advertising expense Selling and administrative salaries Rent on factory facilities Depreciation on sales equipment Depreciation on factory equipment Indirect labor cost Utilities expense Insurance expense Net loss $264,000 190,000 90,000 75,000 60,000 45,000 31,000 28,000 12,000 8,000 803,000 ($23,000) Prior to October 2017, the company had been profitable every month. The company's president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows. Inventory balances at the beginning and end of October were: Raw materials Work in process Finished goods October 1 $18,000 20,000 30,000 October 31 $29,000 14,000 50,000 Only 75% of the utilities expense and 60% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities. Instructions (a) Prepare a schedule of cost of goods manufactured for October 2017. (b) Prepare a correct income statement for October 2017 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". Prepare a schedule of cost of goods manufactured for October 2017 Value Value Value Value Value EMPIRE COMPANY Cost of Goods Manufactured Schedule For the Month Ended October 31, 2017 Work in process inventory, October 1 Direct materials Raw materials inventory, October 1 Raw materials purchases Total raw materials available for use Less: Raw materials inventory, October 31 Direct materials used Direct labor Manufacturing overhead Factory facility rent Depreciation on factory equipment Indirect labor Factory utilities Factory insurance Total manufacturing overhead Total manufacturing costs Total cost of work in process Less: Work in process, October 31 Cost of goods manufactured Value Value Value Value (b) Prepare a correct income statement for October 2017. Value EMPIRE COMPANY Income Statement For the Month Ended October 31, 2017 Sales Revenue Cost of goods sold Finished goods inventory, October 1 Value Cost of goods manufactured Cost of goods available for sale Less: Finished goods inventory, October 31 Value Cost of goods sold Gross profit Operating expenses Advertising expense Value Selling and administrative salaries Value Depreciation expense - sales equipment Value Insurance expense ? Utilities expense 7 Total operating expenses Net income 7