P14-5A Prepare a cost of goods manufactured schedule and a correct Income statement Empire Company is a manufacturer of smart phones. Its controller resigned in October 2020. An inexperienced assistant accountant has prepared the following income statement for 4 the month of October 2020. UA EMPIRE COMPANY Income Statement For the Month Ended October 31, 2020 6 7 8 9 10 11 12 $780,000 14 15 16 17 13 19 20 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) 26. Prior to October 2020, the company had been proftable every month. The company's president is concemed 25 about the accuracy of the income statement. As her friend, you have been asked to review the income statement 25 and make necessary corrections. After examining other manufacturng cost data, you have acquired additional 27 Information as follows. Inventory balances at the beginning and end of October were: 29 October October 31 Raw materials $18,000 $29.000 Work in process 20.000 14.000 Finished goods 30,000 50,000 Only 75% of the utilities expense and 60% of the insurance expense apply to factory 36 operations. The remaining amounts should be charged to seling and administrative 37 activities 39 Instructions 40 a Prepare a schedule of cost oods manufactured for October 2020 Prepare a correct income statement for October 2020. 42 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 2020. E14-4 E14-12 E14-16 P14-4A P14.5A + Ready 6 OOT B C D E F G H Prepare a schedule of cost of goods manufactured for October 2020. Value Value Value 2 Value ? Value Value Value Value EMPIRE COMPANY Cost of Goods Manufactured Schedule For the Month Ended October 31, 2020 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 Rent on factory facilities Depreciation on factory equipment Indirect labor Factory utilities Factory insurance Total manufacturing overhead Total manufacturing costs Total cost of work in process 57 Less: Work in process, October 31 Cost of goods manufactured 69 70 71 (6) Prepare a correct income statement for October 2020. 72 73 EMPIRE COMPANY Income Statement For the Month Ended October 31, 2020 Sales Revenue Cost of goods sold Finished goods inventory, October 1 Valuo Cost of goods manufactured 2 Cost of goods available for sale 12 Less: Finished apods inventory, October Value 3 2 4 5 + Value 2 Value 76 27 78 70 C D vooroor WTR Prove 67 Less: Work in process, October 31 Value 68 Cost of goods manufactured 2 69 70 71 ) Prepare a correct income statement for October 2020. 72 73 EMPIRE COMPANY 174 Income Statement 75 For the Month Ended October 31, 2020 76 Sales Revenue Value 22 Cost of goods sold 78 Finished goods Inventory, October 1 Value 79 Cost of goods manufactured ? 80 Cost of goods available for sale ? Less: Finished goods Inventory, October Value 82 Cost of goods sold Gross profit Operating expenses Advertising expense Value 36 Selling and administrative salaries Value 37 Depreciation expense - salos equipment Value Insurance expense Utilities expense ? 90 Total operating expenses 91 Net income 92 93 94 95 Mfter you have completed P14-5A, consider the additional question. 96 Assume that utilities expense and insurance expense changed to $15,000 and $9.000 respectively. Also assume 97 that 80% of utilis expense and 65% of insurance expense apply to factory operations. Show the impact of these changes on the cost of goods manufactured schedule and the income statement 99 100 101 102 103 104 105 100 107 109 110