Question

Part One: In 2012, Robin Prough opened Robin’s Roses, a small shop selling floral ­arrangements. On December 31, 2013, her accounting records show the following: Sales revenue................................................................................................. $ 59,000
Utilities for shop............................................................................................. $ 1,200
Inventory on December 31, 2013.................................................................. $ 9,900
Inventory on January 1, 2013......................................................................... $ 12,000
Rent for shop.................................................................................................. $ 3,600
Sales commissions.......................................................................................... $ 4,600
Purchases of merchandise.............................................................................. $ 34,000

Requirement
Prepare an income statement for Robin’s Roses, a merchandiser, for the year ended ­December 31, 2013.
Part Two: Robin’s Roses succeeded so well that Robin 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..................................................................................................... $ 4,400
Delivery expense.................................................................................................... $ 2,000
Sales salaries expense............................................................................................ $ 4,700
Plant janitorial services........................................................................................... $ 1,050
Work in process inventory, December 31, 2014.................................................... $ 3,500
Finished goods inventory, December 31, 2013..................................................... 0
Finished goods inventory, December 31, 2014..................................................... $ 6,500
Sales revenue......................................................................................................... $ 102,000
Customer service hotline expense......................................................................... $ 1,100
Direct labor............................................................................................................ $ 21,000
Direct material purchases....................................................................................... $ 35,000
Rent on manufacturing plant................................................................................. $ 8,600
Raw materials inventory, December 31, 2013........................................................ $ 14,000
Raw materials inventory, December 31, 2014........................................................ $ 10,500
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 Robin’s Roses?
Part Three: Show the ending inventories that would appear on these balance sheets:
1. Robin’s Roses at December 31, 2013.
2. Floral Manufacturing at December 31, 2014.



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  • CreatedAugust 27, 2014
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