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Problem 16.10A

Preparing an Income Statement Using the Cost of Finished Goods Manufactured

Valley Company reports the following information pertaining to its 2002 operating activities:

12/31/021/1/02

BalanceBalance

Materials Inventory$62,000$55,000

Work in Process Inventory40,00030,000

Finished Goods Inventory18,00022,000

During the year, the company purchased $42,000 of direct materials and incurred $32,000 of direct labor costs.  Total manufacturing overhead costs for the year amounted to $20,000.  Selling and administrative expenses amounted to $32,000, and the company’s annual sales amounted to $95,000

Instruction

a.

Prepare Ridgeway’s schedule of the cost of finished goods manufactured for 2002.

b.

Prepare Ridgeway’s 2002 income statement (ignore income taxes).

16-10Alternate Problems for use with Financial and Managerial Accounting, 12e

© The McGraw-Hill Companies, 2002

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