- P1 5a Phillips Company Is A Manufacturer Of Computers Its Controller Resigned In October 2014 An Inexperienced Assista 1 (67.7 KiB) Viewed 13 times
- P1 5a Phillips Company Is A Manufacturer Of Computers Its Controller Resigned In October 2014 An Inexperienced Assista 2 (67.7 KiB) Viewed 13 times
P1-5A Phillips
Company is a manufacturer of computers. Its controller resigned in October 2014. An inexperienced assistant accountant has prepared the following income
statement for the month of October 2014. Phillips
Company Income
Statement For the Month Ended October 31, 2014 Sales revenue Less: Operating expenses Raw materials purchases Direct labor cost Advertising expense Selling and administrative salaries Rent on factory facilities Depreciation on sales equipment Depreciation on factory equipment Indirect labor cost Utilities expense Insurance expense $264,000 190,000 Raw materials Work in process Finished goods 90,000 75,000 60,000 45,000 31,000 28,000 12,000 8,000 $780,000 Net loss Prior to October 2014, the
company had been profitable every month. The
company's president is concerned about the accuracy of the income
statement. As her friend, you have been asked to review the income
statement and make necessary corrections. After examin- ing other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of October were: October 1 October 31 $18,000 16,000 30,000 $29,000 14,000 45,000 803,000 $ (23,000) 2. Only 75% of the utilities expense and 60% of the insurance expense apply to factory opera- tions. The remaining amounts should be charged to selling and administrative activities. Instructions (a) Prepare a schedule of cost of goods manufactured for October 2014. (b) Prepare a correct income
statement for October 2014.