Fine Cabinets, Inc., produces custom cabinets. The following inventory balances appeared on its balance sheet. (Note that the most current financial information is presented in the first column.)

 

December 31, 2012

December 31, 2011

Raw materials inventory

$ 8,000

$ 10,000

Work-in-process inventory

600,000

550,000

Finished goods inventory

350,000

410,000

Fine Cabinets had $1,265,000 in sales for the year ended December 31, 2012. The company also had the following costs for the year:

 

Selling

$ 90,000

General and administrative

$240,000

Raw materials purchases

$100,000

Direct labor used in production

$125,000

Manufacturing overhead

$630,000

Of the total raw materials placed in production for the year, $12,000 was for indirect materials and must be deducted to find direct materials placed in production.

Required:

1. Prepare the schedules listed in the following for the year ended December 31, 2012. Use the format shown in Figure 1.7 “Income Statement Schedules for Custom Furniture Company”. (Note that Figure 1.7 “Income Statement Schedules for Custom Furniture Company” shows information for a month and this review problem presents information for a year.)

1. Schedule of raw materials placed in production

2. Schedule of cost of goods manufactured

3. Schedule of cost of goods sold

2. Prepare an income statement for the year ended December 31, 2012. Use the format shown in Figure 1.8 “Income Statement for Custom Furniture Company”.

3. Assume Fine Cabinets, Inc., is a merchandising company that purchases its cabinets from a manufacturer. Use the information from the schedule of cost of goods sold prepared in requirement 1and the income statement prepared in requirement 2 to prepare an income statement. Use the format shown in Figure 1.9 “Merchandising Company Income Statement for Fashion, Inc.”.

                

Figure 1.7 Income Statement Schedules for Custom Furniture Company

 Figure 1.8 Income Statement for Custom Furniture Company

 

Figure 1.9 Merchandising Company Income Statement for Fashion, Inc.