Required information The following selected account balances are provided for De

Question

Required information The following selected account balances are provided for Delray Mfg Sales Raw materials inventory, Dec. 31, 2016 Work in process inventory, Dec. 31, 2016 Finished goods inventory, Dec. 31, 2016 Raw materials purchases Direct labor Factory computer supplies used Indirect labor Repairs-Factory equipment Rent cost of factory building Advertising expense General and administrative expenses Raw materials inventory, Dec. 31, 2017 Work in process inventory, Dec. 31, 2017 Finished goods inventory $ 1,084,000 40,000 53,300 63,600 196,500 222,000 23,200 47,000 5,250 57,000 107,000 126,000 42,500 38,700 65,100 Dec. 31, 2017

Explanation / Answer

Solution:

Preparing an Income Statement for Delray Mfg:

DELRAY MFG.

Income Statement

For Year Ended December 31, 2017

* Calculation of the Cost of Goods Manufactured:

DELRAY MFG.

Income Statement

For Year Ended December 31, 2017

Sales $1,084,000 Less: Cost of Goods Sold Finished goods inventory, December 31,2016 $63,600 Add: Cost of goods manufactured $563,050* Cost of goods available for sale $626,650 Less: Finished goods inventory, December 31, 2017 ($65,100) Cost of goods sold for 2017 ($561,550) Gross profit $522,450 Less: Operating expenses Advertising expenses $107,000 General and administrative expenses $126,000 Total operating expenses ($233,000) Operating income $289,450

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