Part One: In 2011, Lindsey Conway opened Lindsey's Blooms, a small shop selling fl oral arrangements. On December 31, 2011, her accounting records show the following:
Inventory on December 31, 2011.................................................................... $ 9,300
Inventory on January 1, 2011........................................................................... $12,000
Sales revenue................................................................................................... $58,000
Utilities for shop............................................................................................... $ 1,600
Rent for shop.................................................................................................... $ 3,800
Sales commissions............................................................................................ $ 4,500
Purchases of merchandise................................................................................ $38,000
Requirement
Prepare an income statement for Lindsey's Blooms, a merchandiser, for the year ended December 31, 2011.
Part Two: Lindsey's Blooms succeeded so well that Lindsey decided to manufacture her own brand of floral supplies: Floral Manufacturing. At the end of December 2012, her accounting records show the following:
Work in process inventory, December 31, 2012 .............................................. $ 1,000
Finished goods inventory, December 31, 2011.......................................................... 0
Finished goods inventory, December 31, 2012................................................. $ 5,000
Sales revenue.................................................................................................. $101,000
Customer service hotline expense.................................................................. $ 1,400
Utilities for plant.............................................................................................. $ 4,100
Delivery expense............................................................................................. $ 3,000
Sales salaries expense..................................................................................... $ 4,200
Plant janitorial services.................................................................................... $ 1,350
Direct labor..................................................................................................... $ 22,000
Direct material purchases................................................................................ $ 39,000
Rent on manufacturing plant.......................................................................... $ 8,800
Raw materials inventory, December 31, 2011................................................. $ 10,000
Raw materials inventory, December 31, 2012................................................. $ 9,500
Work in process inventory, December 31, 2011........................................................ 0
Requirements
1. Calculate the cost of goods manufactured for Floral Manufacturing for the year ended
December 31, 2012.
2. Prepare an income statement for Floral Manufacturing for the year ended December 31, 2012.
3. How does the format of the income statement for Floral Manufacturing differ from the income statement of Lindsey's Blooms?
Part Three: Show the ending inventories that would appear on these balance sheets:
1. Lindsey's Blooms at December 31, 2011.
2. Floral Manufacturing at December 31, 2012.