The newly hired business manager/accountant prepared the following income statement for the 3^rd quarter ended September 30, 2020:

Steevans GPS Manufacturing Company Income Statement For the Third Quarter Ended September 30, 2020

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Sales Revenue (5,200 devices @ $450/device) $ 2,340,000

Operating Expenses:

Raw Material Purchases $ 792,000 Advertising expenses 270,000 Indirect labor 84,000 Direct Labor 570,000 Selling and Admin. Salaries 225,000 Utilities expense 48,000 Rent-Factory Building 180,000 Insurance expense 33,000 Depreciation-Factory Equipment 91,000 Depreciation-Sales Equipment 135,000

Total Operating Expenses (2,428,000)

NET INCOME (LOSS) $( 88,000)

Mr. Harrland, Sr., is greatly disturbed by these reported results. The company had been consistently reporting profit in prior quarters. Consequently, he has asked you to review the income statement and recommend any corrections and adjustments.

You inquired and obtained the following additional data:

1. Inventory Data July 1 September 30

Raw Material $48,000 $204,000 Work-in-Progress 96,000 84,000 Finished Goods 90,000 288,000

2. Seventy-five percent (75%) of the utility expense and sixty-six and two-thirds percent (66 2/3%) of the insurance expense are to be applied to the factory. The remaining amounts are to be considered selling and administrative expenses.

REQUIRED:

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 cost of goods sold for the quarter ended September 30, 2020.
2. A corrected multi-step income statement for the quarter ended September 30, 2020. (See format in Exhibit #1)