Question
Problem 2-44A Tombert Company is a manufacturer of computers. Its controller resigned in October 2016. An inexperienced assistant accountant has prepared the following income statement
Problem 2-44A
Tombert Company is a manufacturer of computers. Its controller resigned in October 2016. An inexperienced assistant accountant has prepared the following income statement for the month of October 2016.
TOMBERT COMPANY Income Statement For the Month Ended October 31, 2016 | |||||
Sales (net) | $ 784,600 | ||||
Less: Operating expenses | |||||
Raw materials purchases | $264,450 | ||||
Direct labour cost | 190,900 | ||||
Advertising expense | 89,300 | ||||
Selling and administrative salaries | 74,450 | ||||
Rent on factory facilities | 60,750 | ||||
Depreciation on sales equipment | 44,700 | ||||
Depreciation on factory equipment | 31,800 | ||||
Indirect labour cost | 28,300 | ||||
Utilities expense | 12,800 | ||||
Insurance expense | 8,300 | 805,750 | |||
Net Loss | $(21,150) |
Prior to October 2016, the company had been profitable every month. The companys president is concerned about the accuracy of the income statement. As his friend, he has asked you to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired the following additional information. 1. Inventory balances at the beginning and end of October were as follows:
October 1 | October 31 | |||
Raw materials | $17,500 | $29,600 | ||
Work in process | 16,500 | 14,500 | ||
Finished goods | 30,900 | 45,700 |
2. Only 80% of the utilities expense and 51% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities. Calculate the following:
1. Prepare a schedule of the cost of goods manufactured for October 2016. (Round answers to 0 decimal places, e.g. 125.)
TOMBERT COMPANY Cost of Goods Manufactured Schedule For the Month Ended October 31, 2016 |
2.
Prepare a correct income statement for October 2016. (Round answers to 0 decimal places, e.g. 125. Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).)
TOMBERT COMPANY Income Statement For the Month Ended October 31, 2016 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started