Saima Pvt. Ltd., is a manufacturer of the Hand Bags. Its Controller of Accounts resigned in April 2014. An inexperienced Assistant Accountant has prepared the following income statement for the month of April 2014: Salma Pvt. Ltd. Income Statement For the month ended April 30, 2014 Rupees Sales (net) 1,340,000 Less: Operating expenses Raw materials purchased 400,000 Direct labour cost 300,000 Advertising expense 150,000 Selling and administrative salaries 140,000 Rent for factory 120,000 Depreciation - Sales equipment 110,000 Depreciation - Factory equipment 70,000 Indirect labour cost 40,000 Factory utilities 20,000 Factory insurance 10,000 (1,360,000) Net loss (20,000) Prior to April 2014, the company had been profitable every month. The company's CEO is concerned about the accuracy of the income statement. As a Senior Accountant, you are asked to review the income statement and make necessary corrections. After examining other manufacturing cost data you acquired additional information as follows: () Inventory balances at the beginning and end of April were: Rupees April 1 April 30 Raw materials 39,000 66,000 Work in process 50,000 42.000 Finished goods 80,000 124,000 () Only 60% of the utilities expenses and 70% of the insurance expense apply to factory operations, the remaining amount should be charged to selling and administrative expenses Required: 1. Prepare cost of goods manufactured statement for the month of April 2014. 2. Prepare statement of cost of goods sold for the month of April 2014. 3. Prepare revised income statement for the month ended April 2014. 4. Which industry do require to prepare cost of good manufacturing statement (COGM)? And why company do keep it separate from cost of good sold statement (COGS)? 5. What would happen to Net Profit or Loss in revised income statement for the month ended April 2014 if company purchases factory at cost of Rs. 2 billion on Janaury 2014 having 5% straight line depreciation rate? (Hint: Rent for factory will not be charged)