Please answer and show each steps on how each problem is solved if possible.

Woodsons Hand Care and Cleaner is owned and operated by husband and wife, Eric and Heather Woodson. The company has been in operation for several years and manufacturers a special quality hand sanitizer that not only cleans but moisturizes. The company has been quite successful selling the hand sanitizer in a 10-fluid ounce pump over the past several months but is experiencing a slow decline in profits for the past quarter, according to reports generated by the administrative staff . Heather serves as the Chief Financial Officer for the Company but has only worked in the business for 1 years once their youngest child started first grade. Eric takes care of operations, logistics, etc. A business manager/accountant was hired part-time to assist the staff in carrying out the accounting and financial duties.

The company had been consistently reporting net profits over the past several quarters but a decline in profits over the past couple of quarters is quite noticeable. The Woodsons are troubled by this performance and believe they need an expert to review the companys records and operations. Consequently, they have retained your consulting firm to perform research and evaluation and provide recommendations for improvement and recovery of profitable operations. There is also a need for an improved cash flow management strategy.

Two distinct areas that you are investigating are manufacturing operations and cash flow management. Details are provided below for both areas.

PART ONE:

Manufacturing and Budgeting:

The newly hired business manager/accountant prepared the following income statement for the quarter ended December 31, 2020:

Woodsons Hand Care and Cleaner Income Statement For the Fourth Quarter Ended December 31, 2020

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Sales Revenue $ 468,000

Operating Expenses:

Raw Material Purchases $ 158,400 Advertising expenses 64,000 Indirect labor 16,800 Direct Labor 114,000 Selling and Admin. Salaries 85,000 Utilities expense 9,600 Rent-Factory Building 36,000 Insurance expense 6,600 Depreciation-Factory Equipment 18,200 Depreciation-Sales Equipment 27,000

Total Operating Expenses ( 485,600)

NET INCOME (LOSS) $( 67,600)

The Woodsons are greatly disturbed by these reported results. The company had been consistently reporting profit in prior quarters. Consequently, they have retained you as a consultant and has asked you to review the income statement and recommend any needed corrections and adjustments.

You inquired and obtained the following additional data:

1. Inventory Data October 1 December 31

Raw Material $ 9,600 $ 40,800 Work-in-Progress 19,200 16,800 Finished Goods 18,000 57,600

2. Seventy-five percent (75%) of the utility expense and fifty-five percent (55%) of the insurance expense are to be applied to the factory. The remaining amounts are to be considered selling and administrative expenses.

Based on your assessment, the following schedule and financial statement are to be prepared and revised, respectively, in the proper format.

1. A detailed schedule of goods sold for the quarter ended December 31, 2020.

2. A corrected multi-step income statement for the quarter ended December 31, 2020.