Question

Part One: In 2009, Lindsey Tapia opened Lindsey’s Pets, a small retail shop selling pet supplies. On December 31, 2009, her accounting records show the following:
Inventory on December 31, 2009............................................................ $ 9,400
Inventory on January 1, 2009 ................................................................. 12,200
Sales revenue........................................................................................... 55,000
Utilities for shop...................................................................................... 1,500
Rent for shop.......................................................................................... 3,400
Sales commissions................................................................................... 4,100
Purchases of merchandise........................................................................ 34,500
Requirement
Prepare an income statement for Lindsey’s Pets, a merchandiser, for the year ended
December 31, 2009.
Part Two: Lindsey’s Pets succeeded so well that Lindsey decided to manufacture her own brand of pet toys—Best Friends Manufacturing. At the end of December 2010, her accounting records show the following:
Work in process inventory, December 31, 2010.................................... $ 4,000
Finished goods inventory, December 31, 2009...................................... 0
Finished goods inventory, December 31, 2010...................................... 3,000
Sales revenue......................................................................................... 103,000
Customer service hotline expense.......................................................... 1,400
Utilities for plant................................................................................... 4,500
Delivery expense ................................................................................... 2,500
Sales salaries expense ............................................................................ 4,200
Plant janitorial services.......................................................................... 1,150
Direct labour......................................................................................... 20,000
Direct material purchases...................................................................... 39,000
Rent on manufacturing plant ................................................................ 8,400
Raw materials inventory, December 31, 2009...................................... 10,000
Raw materials inventory, December 31, 2010....................................... 8,000
Work in process inventory, December 31, 2009.................................... 0
Requirements
1. Prepare a schedule of cost of goods manufactured for Best Friends Manufacturing for the year ended December 31, 2010.
2. Prepare an income statement for Best Friends Manufacturing for the year ended December 31, 2010.
3. How does the format of the income statement for Best Friends Manufacturing differ from the income statement of Pets?
Part Three: Show the ending inventories that would appear on these balance sheets:
1. Lindsey’s Pets at December 31, 2009.
2. Best Friends Manufacturing at December 31, 2010.


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  • CreatedApril 30, 2015
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