P19-5B Quintana Company is a manufacturer of toys. Its controller resigned in August 2012. An inexperienced assistant accountant has prepared the following income statement for the month of August 2012 $675,000 QUINTANA COMPANY Income Statement For the Month Ended August 31, 2012 Sales (net) Less: Operating expenses Raw materials purchases $220,000 Direct labor cost 160,000 Advertising expense 75,000 Selling and administrative salaries 70,000 Rent on factory facilities 60,000 Depreciation on sales equipment 50.000 Depreciation on factory equipment 35,000 Indirect labor cost 20,000 Utilities expense 10,000 Insurance expense 5,000 Net loss 705.000 S430,000) Prior to August 2012 the company had been profitable every month. The company's president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows 1. Inventory balances at the beginning and end of August were: August 1 August 31 Raw materials $19.500 $30,000 Work in process 25,000 21.000 Finished goods 40.000 59.000 2. Only 50% of the utilities expense and 70% of the insurance expense apply to factory operations, the remaining amounts should be charged to selling and administrative activities. Instructions (a) Prepare a cost of goods manufactured schedule for August 2012 (b) Prepare a correct income statement for August 2012