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Problem 16.9A

Preparing an Income Statement Using the Cost of Finished Goods Manufactured

Sallyton Company, a sole proprietorship, reports the following information pertaining to its 2002 operating activities:

12/31/021/1/02

BalanceBalance

Materials Inventory$25,000$32,000

Work in Process Inventory33,00058,000

Finished Goods Inventory70,00060,000

During the year, the company purchased $40,000 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 $55,000, and the company’s annual sales amounted to $250,000

Instruction

a.

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

b.

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

Alternate Problems for use with Financial and Managerial Accounting, 12e16-9

© The McGraw-Hill Companies, 2002

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