Question

Part One: In 2012, Penny Henderson opened Penny’s Posies, a small retail shop selling floral arrangements. On December 31, 2013, her accounting records show the following:
Sales revenue.................................................................................................... $ 53,000
Utilities for shop................................................................................................ $ 1,400
Inventory on December 31, 2013..................................................................... $ 9,600
Inventory on January 1, 2013............................................................................ $ 12,700
Rent for shop..................................................................................................... $ 4,600
Sales commissions............................................................................................. $ 4,900
Purchases of merchandise................................................................................. $ 37,000

Requirement
Prepare an income statement for Penny’s Posies, a merchandiser, for the year ended December 31, 2013.
Part Two: Penny’s Posies was so successful that Penny decided to manufacture her own brand of floral supplies: Floral Manufacturing. At the end of December 2014, her accounting records show the following:
Utilities for plant.......................................................................................... $ 4,300
Delivery expense......................................................................................... $ 2,500
Sales salaries expense................................................................................. $ 4,400
Plant janitorial services................................................................................ $ 1,550
Work in process inventory, December 31, 2014......................................... $ 3,500
Finished goods inventory, December 31, 2013.......................................... 0
Finished goods inventory, December 31, 2014.......................................... $ 4,000
Sales revenue.............................................................................................. $ 109,000
Customer service hotline expense.............................................................. $ 1,700
Direct labor................................................................................................. $ 20,000
Direct material purchases............................................................................ $ 34,000
Rent on manufacturing plant...................................................................... $ 9,600
Raw materials inventory, December 31, 2013............................................. $ 11,000
Raw materials inventory, December 31, 2014............................................. $ 6,500
Work in process inventory, December 31, 2013......................................... 0

Requirements
1. Calculate the Cost of Goods Manufactured for Floral Manufacturing for the year ended December 31, 2014.
2. Prepare an income statement for Floral Manufacturing for the year ended December 31, 2014. 3. How does the format of the income statement for Floral Manufacturing differ from the income statement of Penny’s Posies?
Part Three: Show the ending inventories that would appear on these balance sheets:
1. Penny’s Posies at December 31, 2013
2. Floral Manufacturing at December 31, 2014




$1.99
Sales15
Views627
Comments0
  • CreatedAugust 27, 2014
  • Files Included
Post your question
5000