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Manufacturing Accounting
DEMONSTRATION PROBLEM
The columns below are taken from the work sheet of the Lakewood Tub and Tile Company,
Inc. The January 1 inventory of work-in-process is $101,360.
Lakewood Tub and Tile Company, Inc.
Work Sheet
For Year Ended December 31, 20
STATEMENT OF COST OF
ACCOUNT NAME
GOODS MANUFACTURED
DEBIT
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Sales
Sales Returns and Allowances
Sales Discounts
Selling Expenses (control)
General Expenses (control)
Raw Materials Purchases
Direct Labor
Indirect Labor
Heat, Light, and Power
Factory Supervision
Rent, Factory
Machinery Repairs
Depreciation Expense,
Machinery
Factory Supplies Used
Factory Insurance Expired
Small Tools Expense
Miscellaneous Factory Costs
Loss on Disposal of
Equipment
Interest Expense
Income Tax Expense
Manufacturing Summary
24
25
29
CREDIT
1,206,592.00 1
305,600.00
389,520.00
88,672.00
22,096.00
21,544.00
14,400.00
14,336.00
2
3
4
5
6
7
8
9
10
11
12
13
13,904.00
3,920.00
2,880.00
992.00
520.00
14
15
16
17
18
19
6,400.00
6,080.00
36,640.00
57,168.00
101,360.00
59,056.00
106,272.00
1,036,912.00
1,036,912.00
Net Income
30
31
165,328.00
871,584.00
1,036,912.00
20
21
22
23
24
147,680.00
28
INCOME STATEMENT
DEBIT
10,080.00
9,600.00
149,560.00
58,888.00
Income Summary
26
27
CREDIT
154,240.00 25
26
871,584.00
1,296,512.00
64,320.00
1,360,832.00
27
1,360,832.00 28
29
1,360,832.00 30
31
1
2
SOLUTION
Lakewood Tub and Tile Company, Inc.
Statement of Cost of Goods Manufactured
For Year Ended December 31, 20
Work-in-Process Inventory, January 1, 20
Raw Materials:
Raw Materials Inventory, January 1, 20
Raw Materials Purchases
Cost of Raw Materials Available for Use
Less Raw Materials Inventory,
December 31, 20
Cost of Raw Materials Used
Direct Labor
Factory Overhead:
Indirect Labor
Heat, Light, and Power
Factory Supervision
Rent, Factory
Machinery Repairs
Depreciation Expense, Machinery
Factory Supplies Used
Factory Insurance Expired
Small Tools Expense
Miscellaneous Factory Costs
Total Factory Overhead
Total Manufacturing Costs
Total Cost of Work-in-Process During
Period
Less Work-in-Process Inventory,
December 31, 20
Cost of Goods Manufactured
$101,360.00
$
57,168.00
305,600.00
$ 362,768.00
59,056.00
$303,712.00
389,520.00
$
88,672.00
22,096.00
21,544.00
14,400.00
14,336.00
13,904.00
3,920.00
2,880.00
992.00
520.00
183,264.00
876,496.00
$977,856.00
106,272.00
$871,584.00
SOLUTION (concluded)
Lakewood Tub and Tile Company, Inc.
Income Statement
For Year Ended December 31, 20
Revenue from Sales:
Sales
Less: Sales Returns and Allowances
Sales Discounts
Net Sales
Cost of Goods Sold:
Finished Goods Inventory, January 1, 20
Cost of Goods Manufactured
Cost of Goods Available for Sale
Less Finished Goods Inventory, December 31, 20
Cost of Goods Sold
Gross Profit
Operating Expenses:
Selling Expenses (control)
General Expenses (control)
Total Operating Expenses
Income from Operations
Other Expenses:
Loss on Disposal of Equipment
Interest Expense
Total Other Expenses
Income Before Income Tax
Income Tax Expense
Net Income
$ 1,206,592.00
$
10,080.00
9,600.00
19,680.00
$ 1,186,912.00
147,680.00
871,584.00
$ 1,019,264.00
154,240.00
865,024.00
321,888.00
208,448.00
113,440.00
149,560.00
58,888.00
6,400.00
6,080.00
$
$
12,480.00
100,960.00
36,640.00
64,320.00
General Journal
Date
20
Dec.
Description
Adjusting Entries
31 Manufacturing Summary
Raw Materials Inventory
Page 11
Post.
Ref.
Debit
Credit
90,000.00
90,000.00
100,000.00
31 Manufacturing Summary
Work-in-Process Inventory
140,000.00
31 Work-in-Process Inventory
Manufacturing Summary
130,000.00
100,000.00
140,000.00
130,000.00
General Journal
Date
Description
20
Dec. 31 Manufacturing Summary
Raw Materials Purchases
Direct Labor
Indirect Labor
Supervisory Sales
Heat, Light, and Power
Depreciation Expense, Factory Equipment
Depreciation Expense, Factory Building
Repairs and Maintenance
Factory Insurance Expired
Factory Supplies Used
Miscellaneous Factory Costs
31
Income Summary
Manufacturing Summary
Page 12
Post.
Ref.
Debit
Credit
1,200,000.00
230,000.00
565,000.00
120,000.00
110,000.00
42,000.00
32,000.00
25,000.00
24,000.00
22,000.00
14,000.00
16,000.00
1,200,000.00
1,200,000.00