The following information is available for Bandera Manufacturing Company for the month ending January 31: Cost of goods manufactured $306,090
Selling expenses 102,250
Administrative expenses 54,050
Sales 651,250
Finished goods inventory, January 1 73,590
Finished goods inventory, January 31 67,080
For the month ended January 31, determine Bandera's (a) cost of goods sold, (b) gross profit, and (c) net income
(a) Bandera Manufacturing Company Cost of Goods Sold January 31
(b) Bandera Manufacturing Company Gross Profit January 31
(c) Bandera Manufacturing Company Net Income January 31 Operating expenses: Total operating expenses
The following events took place for Digital Vibe Manufacturing Company during January, the first month of its operations as a producer of digital video monitors:
a. Purchased $48,300 of materials
b. Used $37,200 of direct materials production.
c. Incurred $55,500 of direct labor wages.
d. Incurred $78,200 of factory overhead. process to finished goods.
e. Transferred $129,900 of work
f. Sold goods for $232,300.
g. Sold goods with a cost of $103,400.
h. Incurred $59,400 of selling expenses .
i. Incurred $26,100 of administrative expense.
Using the information given, complete the following:
a. Prepare the January income statement for Digital Vibe Manufacturing Company. Digital Vibe Manufacturing Company Income Statement For the Month Ended January 31 Operating expenses: Total operating expenses
b. Determine the Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances at the end of the first month of operations. Digital Vibe Manufacturing Company Inventory Balances For the Month Ended January 31 Inventory balances on January 31: Materials Work in process Finished goods

Answer and Explanation:

1. The computation of cost of goods sold, gross profit, and net income is shown below:-

a. Cost of goods sold is

                    Bandera Manufacturing Company

                                Cost of Goods Sold

                                     For the year January 31  

Particulars                                                     Amount

Finished Goods Inventory, Jan 1                $73,590

Add: Cost of Goods Manufactured             $306,090

Total Goods Available for Sales                  $379,680

Less: Finished Goods Inventory, Jan 31      $67,080

Cost of Goods Sold                                        $312,600

b. Gross profit is

                    Bandera Manufacturing Company

                                           Gross Profit

                                   For the year Jan 31

Particulars                                                     Amount

Sales                                                               $651,250

Less: Cost of Goods Sold                               $312,600

Gross Profit                                                      $338,650

c. Net income is

                               Bandera Manufacturing Company

                                               Net Income

                                        For the year Jan 31

Particulars                                                     Amount

Gross Profit                                                    $338,650

Operating Expenses

Selling expenses                  $102,250  

Administrative expenses       $54,050  

Less: Total Operating Expense                      $156,300

Net Income                                                       $182,350

2. a. The preparation of January income statement for Digital Vibe Manufacturing Company is shown below:-

                  Digital Vibe Manufacturing Company

                                Income Statement

                     For the Month Ended January 31

Particulars                                        Amount

Sales                                                  $232,300

Less: Cost of goods sold                 $103,400

Gross profit                                       $128,900

Less: Operating expense

Selling expense             $59,400  

Administrative expense  $26,100  

Total operating expense                       $85,500

Net income                                            $43,400

b. The computation of Materials Inventory, Work in Process Inventory, and Finished Goods Inventory balances are shown below:-

Particulars                                          Amount

Materials purchased                          $48,300

Less: Materials used for production $37,200

Ending balance of materials              $11,100

Particulars                                           Amount

Materials used for production           $37,200

Add: Direct labor wages                    $55,500

Add: Factory overhead                      $78,200

The total cost of manufacturing       $170,900

Less: Transferred to finished goods $129,900

Ending balance of work-in-process    $41,000

Transfer from work-in-process            $129,900

Less: Cost of goods sold                      $103,400

Ending balance of finished goods        $26,500

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