P14-5A Phillips Company is a manufacturer of computers. Its controller resigned in October 2014. An inexperienced assistant accountant has prepared the following income statement for the month of October 2014. Sales revenue PHILLIPS COMPANY Income Statement For the Month Ended October 31, 2014 $780,000 Prepare a cost of goods manufactured schedule and a correct income statement. (LO 5.6), AN XLS Less: Operating expenses Raw materials purchases $264,000 Direct labor cost 190,000 Advertising expense 90,000 Selling and administrative salaries 75,000 Rent on factory facilities 60,000 Depreciation on sales equipment 45,000 Depreciation on factory equipment 31,000 Indirect labor cost 28,000 Utilities expense 12,000 Insurance expense 8,000 Net loss 803,000 $(23,000) Prior to October 2014, 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 examin- ing other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of October were: Raw materials October 1 $18,000 Work in process 16,000 Finished goods 30,000 October 31 $29,000 14,000 45,000 2. Only 75% of the utilities expense and 60% of the insurance expense apply to factory oper ations. The remaining amounts should be charged to selling and administrative activities. Instructions (a) Prepare a schedule of cost of goods manufactured for October 2014. (b) Prepare a correct income statement for October 2014. (a) CGM $577,800 (b) $1,000