Required:

Prepare schedules of cost of goods manufactured and cost of goods sold and an income statement. (Hint: Prepare the income statement and schedule of cost of goods sold first followed by the schedule of cost of goods manufactured.)

Superior Company provided the following data for the year ended December 31 (all raw materials are used in production as direct materials): Inventory balances at the beginning and end of the year were as follows: The total manufacturing costs added to production for the year were $680,000; the cost of goods available for sale totaled $730,000 the unadjusted cost of goods sold totaled $664,000; and the net operating income was $35,000. The company's underapplied or overapplied overhead is closed to Cost of Goods Sold. \begin{tabular}{|l|l|l|l|} \hline \multicolumn{2}{|c|}{ Superior Company } & & \\ \hline Beginning work in process inventory & & & \\ \hline Direct materials: & & & \\ \hline Beginning raw materials inventory & & & \\ \hline Add: Purchases of raw materials & & & \\ \hline Total raw materials available & & & \\ \hline Less: Ending raw materials inventory & & & \\ \hline Direct materials used in production & & & \\ \hline Direct labor & & & \\ \hline Manufacturing overhead applied to work in process & & & \\ \hline Total manufacturing costs added to production & & & \\ \hline Total manufacturing costs to account for & & & \\ \hline Less: Ending work in process inventory & & \\ \hline Cost of goods manufactured & & & \\ \hline \end{tabular} \begin{tabular}{|l|l|r|} \hline \multicolumn{2}{|c|}{ Superior Company } \\ \hline Income Statement & & \\ \hline Sales & & \\ \hline Cost of goods sold & & \\ \hline Gross margin & & \\ \hline Selling and administrative expenses: & & \\ \hline Administrative expenses & & \\ \hline Selling expenses & & \\ \hline & & \\ \hline & & \\ \hline Net operating income & & \\ \hline \end{tabular} \begin{tabular}{|l|l|} \hline \multicolumn{2}{|c|}{ Superior Company } \\ \hline \multicolumn{2}{|c|}{ Schedule of Cost of Goods Sold } \\ \hline Beginning finished goods inventory \\ \hline Add: Cost of goods manufactured \\ \hline Cost of goods available for sale & \\ \hline Less: Ending finished goods inventory & \\ \hline Unadjusted cost of goods sold & \\ \hline & \\ \hline Adjusted cost of goods sold & \\ \hline \end{tabular}