P19-58 Ortiz Company is a manufacturer of toys. Its controller resigned in August 2017. An inexperienced...

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P19-58 Ortiz Company is a manufacturer of toys. Its controller resigned in August 2017. An inexperienced assistant accountant has prepared the following income statement for the month of August 2017. Sales revenue ORTIZ COMPANY Income Statement For the Month Ended August 31, 2017 $675,000 Less: Operating expenses Raw materials purchases $220,000 Direct labor cost 160,000 Advertising expense 75,000 Selling and administrative salaries 70,000 Rent on factory facilities 60,000 Depreciation on sales equipment 50,000 Depreciation on factory equipment 35,000 Indirect labor cost 20,000 Utilities expense 10,000 Insurance expense 5,000 705,000 Net loss $(30,000) Prior to August 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 examin- ing other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of August were: August 1 Raw materials Work in process Finished goods $19,500 25,000 40,000 August 31 $35,000 21,000 52,000 2. Only 60% of the utilities expense and 70% of the insurance expense apply to factory operations; the remaining amounts should be charged to selling and administrative activities. Instructions (a) Prepare a cost of goods manufactured schedule for August 2017. (b) Prepare a correct income statement for August 2017. P19-58 Ortiz Company is a manufacturer of toys. Its controller resigned in August 2017. An inexperienced assistant accountant has prepared the following income statement for the month of August 2017. Sales revenue ORTIZ COMPANY Income Statement For the Month Ended August 31, 2017 $675,000 Less: Operating expenses Raw materials purchases $220,000 Direct labor cost 160,000 Advertising expense 75,000 Selling and administrative salaries 70,000 Rent on factory facilities 60,000 Depreciation on sales equipment 50,000 Depreciation on factory equipment 35,000 Indirect labor cost 20,000 Utilities expense 10,000 Insurance expense 5,000 705,000 Net loss $(30,000) Prior to August 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 examin- ing other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of August were: August 1 Raw materials Work in process Finished goods $19,500 25,000 40,000 August 31 $35,000 21,000 52,000 2. Only 60% of the utilities expense and 70% of the insurance expense apply to factory operations; the remaining amounts should be charged to selling and administrative activities. Instructions (a) Prepare a cost of goods manufactured schedule for August 2017. (b) Prepare a correct income statement for August 2017.