TruGreen Company is a manufacturer of toys. Its controller resigned in April 2023. An inexperienced assistant...

Transcribed Image Text:

TruGreen Company is a manufacturer of toys. Its controller resigned in April 2023. An inexperienced assistant accountant has prepared the following income statement for the month of April 2023. TruGreen Company Income Statement For the Month Ended April 30, 2023 Sales revenue $1,200,000 Less: Operating expenses Raw materials purchases $374,000 Direct labor cost $272,000 Advertising expense $127,000 Selling and administrative salaries $110,000 Rent on factory facilities $102,000 Rent on office building $50,000 Depreciation on sales equipment $85,000 Depreciation on factory equipment $60,000 Indirect labor cost $34,000 Utilities expense $16,000 Insurance expense $10,000 1,240,000 Net loss ($40,000) Prior to April 2023, 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 examining other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of April were: April 1 April 30 Raw materials $33,000 $59,000 Work in process $42,000 $35,000 Finished goods $68,000 $90,000 2 Institute of Management Technology 2. Only 65% of the utilities expense and 55% of the insurance expense apply to factory operations; the remaining amounts should be charged to selling and administrative activities. a) Prepare a cost of goods manufactured schedule for April 2023. b) Prepare a correct income statement for April 2023. TruGreen Company is a manufacturer of toys. Its controller resigned in April 2023. An inexperienced assistant accountant has prepared the following income statement for the month of April 2023. TruGreen Company Income Statement For the Month Ended April 30, 2023 Sales revenue $1,200,000 Less: Operating expenses Raw materials purchases $374,000 Direct labor cost $272,000 Advertising expense $127,000 Selling and administrative salaries $110,000 Rent on factory facilities $102,000 Rent on office building $50,000 Depreciation on sales equipment $85,000 Depreciation on factory equipment $60,000 Indirect labor cost $34,000 Utilities expense $16,000 Insurance expense $10,000 1,240,000 Net loss ($40,000) Prior to April 2023, 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 examining other manufacturing cost data, you have acquired additional information as follows. 1. Inventory balances at the beginning and end of April were: April 1 April 30 Raw materials $33,000 $59,000 Work in process $42,000 $35,000 Finished goods $68,000 $90,000 2 Institute of Management Technology 2. Only 65% of the utilities expense and 55% of the insurance expense apply to factory operations; the remaining amounts should be charged to selling and administrative activities. a) Prepare a cost of goods manufactured schedule for April 2023. b) Prepare a correct income statement for April 2023.