On December 31, Year 1, Zeus Manufacturing reported the following balances in its inventory accounts:
The following events occurred during Year 2:a) purchased raw materials for cash, $375,000b) raw materials used to make products, $359,500c) direct labor costs of $204,000 were paid in cashd) paid cash for actual overhead costs, $180,500e) completed products that cost $704,500f) sold goods that had cost $696,000 for $985,000 cashg) paid cash for selling and administrative expenses, $206,000Required:1) Prepare Zeus' schedule of cost of goods manufactured and sold for Year 2.2) Prepare the income statement for Year 2.3) Calculate the balances in the Raw
Materials, Work in Process, and Finished Goods Inventory accounts as of December 31, Year 2.
What will be an ideal response?
Answers will vary
| Zeus Manufacturing Company | |
| Schedule of Cost of Good Manufactured and Sold | |
| Year Ended December 31, Year 2 | |
| Beginning materials inventory | $ 21,000 |
| Add purchases | ______375,000 |
| Materials available for use | 396,000 |
| Less inventory in ending inventory | _______36,500 |
| Materials used | 359,500 |
| Direct Labor | 204,000 |
| Overhead | ______180,500 |
| Total manufacturing costs | 744,000 |
| Add beginning work in process inventory Total work in process Less ending work in process | _______32,500 776,500 _______72,000 |
| Cost of goods manufactured | 704,500 |
| Add beginning finished goods inventory | _______36,500 |
| Cost of goods available for sale | 741,000 |
| Less ending finished goods inventory | _______45,000 |
| Cost of goods sold | $ 696,000 |
2)
| Zeus Manufacturing Company | |
| Income Statement | |
| Year Ended December 31, Year 2 | |
| Sales | $ 985,000 |
| Less cost of goods sold | 696,000 |
| Gross margin | 289,000 |
| Less selling and administrative expenses | 206,000 |
| Net income | $ 83,000 |
3) Ending balances in inventory accounts:
Raw Materials = $21,000 + $375,000 - $359,500 = $36,500
Work in Process = $32,500 + $359,500 + $204,000 + $180,500 - $704,500 = $72,000
Finished Goods = 36,500 + $704,500 - $696,000 = $45,000
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