Using the data from Problem 18-2A and the inventory information for Leone Company below, complete the requirements below. Assume income tax expense is $233,725 for the year.
Inventories
Raw materials, December 31, 2014 . . . . . . . . . . .$166,850
Raw materials, December 31, 2015 . . . . . . . . . . . 182,000
Work in process, December 31, 2014 . . . . . . . . . 15,700
Work in process, December 31, 2015 . . . . . . . . . 19,380
Finished goods, December 31, 2014. . . . . . . . . . . 167,350
Finished goods, December 31, 2015. . . . . . . . . . . 136,490
Required
1. Prepare the company’s 2015 schedule of cost of goods manufactured.
2. Prepare the company’s 2015 income statement that reports separate categories for (a) selling expenses and (b) general and administrative expenses.
Analysis Component
3. Compute the (a) inventory turnover, defined as cost of goods sold divided by average inventory, and (b) days’ sales in inventory, defined as 365 times ending inventory divided by cost of goods sold, for both its raw materials inventory and its finished goods inventory. (To compute turnover and days’ sales in inventory for raw materials, use raw materials used rather than cost of goods sold.) Discuss some possible reasons for differences between these ratios for the two types of inventories. Round answers to one decimal place.