Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (5th Edition)
5th Edition
ISBN: 9780134642093
Author: Karen W. Braun, Wendy M. Tietz
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 2.44AP
Prepare income statements (Learning Objective 5)
Part One: In 2015, Patsy Jackson opened Patsy’s Posies, a small retail shop selling floral arrangements. On December 31, 2016, her accounting records show the following:
| Sales revenue | $53,000 |
| Utilities for shop | $1,100 |
| Inventory on December 31, 2016 | $9,100 |
| Inventory on January 1, 2016 | $12,000 |
| Rent for shop | $4,600 |
| Sales commissions | $4,000 |
| Purchases of merchandise | $36,000 |
Requirement
Prepare an income statement for Patsy’s Posies, a merchandiser, for the year ended December 31, 2016.
Part Two: Patsy’s Posies was so successful that Patsy decided to manufacture her own brand of floral supplies: Floral City Manufacturing. At the end of December 2017, her accounting records show the following:
| Utilities for plant | $4,900 |
| Delivery expense | $1,500 |
| Sales salaries expense | $4,300 |
| Plant janitorial services | $1,350 |
| Work in process inventory, December 31, 2017 | $5,000 |
| Finished goods inventory, December 31, 2016 | 0 |
| Finished goods inventory, December 31, 2017 | $2,500 |
| Sales revenue | $104,000 |
| Customer service hotline expense | $1,400 |
| Direct labor | $23,000 |
| Direct material purchases | $30,000 |
| Rent on manufacturing plant | $9,600 |
| Raw materials inventory, December 31, 2016 | $14,000 |
| Raw materials inventory, December 31, 2017 | $8,000 |
| Work in process inventory, December 31, 2016 | 0 |
Requirements
- 1. Calculate the Cost of Goods Manufactured for Floral City Manufacturing for the year ended December 31, 2017.
- 2. Prepare an income statement for Floral City Manufacturing for the year ended December 31, 2017.
- 3. Flow does the format of the income statement for Floral City Manufacturing differ from the income statement of Patsy’s Posies?
Part Three:
Show the ending inventories that would appear on these balance sheets:
- 1. Patsy’s Posies at December 31, 2016
- 2. Floral City Manufacturing at December 31, 2017
Expert Solution & Answer
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Chapter 2 Solutions
Managerial Accounting, Student Value Edition Plus MyLab Accounting with Pearson eText -- Access Card Package (5th Edition)
Ch. 2 - (Learning Objective 1) Which of the following...Ch. 2 - (Learning Objective 2) Which of the following is...Ch. 2 - (Learning Objective 3) A cost that can be traced...Ch. 2 - (Learning Objective 4) Period costs are often...Ch. 2 - (Learning Objective 4) Conversion costs consist of...Ch. 2 - (Learning Objective 4) Which of the following is...Ch. 2 - Prob. 7QCCh. 2 - (Learning Objective 5) Which of the following...Ch. 2 - Prob. 9QCCh. 2 - Prob. 10QC
Ch. 2 - Short Exercises S2-1 Identify types of companies...Ch. 2 - Identify type of company from balance sheets...Ch. 2 - Classify costs by value chain function (Learning...Ch. 2 - Classify costs as direct or indirect (Learning...Ch. 2 - Prime costs Cost objects Product costs Assigned...Ch. 2 - Prob. 2.6SECh. 2 - Classify product costs and period costs (Learning...Ch. 2 - Classify a manufacturers costs (Learning Objective...Ch. 2 - Classify costs incurred by a dairy processing...Ch. 2 - Determine total manufacturing overhead (Learning...Ch. 2 - Prepare a retailers income statement (Learning...Ch. 2 - Compute Cost of Goods Sold for a merchandiser...Ch. 2 - Calculate direct materials used (Learning...Ch. 2 - Compute Cost of Goods Manufactured (Learning...Ch. 2 - Describe other cost terms (Learning Objectives 6...Ch. 2 - Classify costs as fixed or variable (Learning...Ch. 2 - Prob. 2.17SECh. 2 - Classify costs along the value chain for a...Ch. 2 - Classify costs along the value chain for a...Ch. 2 - Value chain and sustainability efforts (Learning...Ch. 2 - Prob. 2.21AECh. 2 - Construct an income statement using product and...Ch. 2 - Work backward to find missing amounts (Learning...Ch. 2 - Prepare a retailers income statement (Learning...Ch. 2 - Compute direct materials used and Cost of Goods...Ch. 2 - Compute Cost of Goods Manufactured and Cost of...Ch. 2 - Continues E2-26A: Prepare income statement...Ch. 2 - Determine whether information is relevant...Ch. 2 - Prob. 2.29AECh. 2 - Classify costs along the value chain for a...Ch. 2 - Classify costs along the value chain for a...Ch. 2 - Value chain and sustainability efforts (Learning...Ch. 2 - Classify and calculate a manufacturers costs...Ch. 2 - Construct an income statement using product and...Ch. 2 - Work backward to find missing amounts (Learning...Ch. 2 - Prob. 2.36BECh. 2 - Compute direct materials used and Cost of Goods...Ch. 2 - Compute Cost of Goods Manufactured and Cost of...Ch. 2 - Continues E2-38B: Prepare income statement...Ch. 2 - Determine whether information is relevant...Ch. 2 - Prob. 2.41BECh. 2 - Classify costs along the value chain (Learning...Ch. 2 - Determine ending inventory balances (Learning...Ch. 2 - Prepare income statements (Learning Objective 5)...Ch. 2 - Prob. 2.45APCh. 2 - Prob. 2.46APCh. 2 - Classify costs along the value chain (Learning...Ch. 2 - Determine ending inventory balances (Learning...Ch. 2 - Prepare income statements (Learning Objective 5)...Ch. 2 - Prob. 2.50BPCh. 2 - Prob. 2.51BPCh. 2 - Calculate operating income (Learning Objective 5)...Ch. 2 - Prob. 2.53ACT
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