Question

Question:
The following balances are from the accounts of Tappan Parts:

January 1 (Beginning) December 31 (Ending)
Direct materials inventory $962,000 $884,000
Work-in-process inventory 1,354,000 1,430,000
Finished goods inventory 312,000 364,000
Direct materials used during the year amount to $1,196,000 and the cost of goods sold for the year was $1,378,000.

Required:

Prepare a cost of goods sold statement.

TAPPAN PARTS

Cost of Goods Sold Statement

For the Year Ended December 31

Beginning work-in-process inventory

Manufacturing costs:

Direct materials:

Beginning inventory

Purchases

Materials available

Less:

Ending inventory

Direct materials used

Other manufacturing costs

Total manufacturing costs:

Total costs of work-in-process

Less:

Ending work-in-process

Cost of goods manufactured

Beginning finished goods inventory

Finished goods available for sale

Less:

Ending finished goods inventory

Cost of goods sold

Answer 1

Answer:

Explanation:

                                           TAPPAN PARTS

                                  Cost of Goods Sold Statement

                                  For the Year Ended December 31

Beginning work-in-process inventory                                  $1,354,000

Manufacturing costs:

Direct materials:                                                  

Beginning inventory                                   $962,000

Purchases                                                    $1,118,000

Materials available                                      $2,080,000

Less:  Ending inventory                               -$884,000

Direct materials used                                                             $1,196,000

Other manufacturing costs                                                    $310,000

Total manufacturing costs:                                                     $1,506,000  

Total costs of work-in-process                                                $2,860,000                            

Less:  Ending work-in-process                                                  $1,430,000

Cost of goods manufactured                                                    $1,430,000

Beginning finished goods inventory                                        $312,000

Finished goods available for sale                                             $1,742,000

Less:  Ending finished goods inventory                                   -$364,000

Cost of goods sold                                                                     1,378,000

The computation is shown below:

Ending work in process inventory = Opening work in process inventory + total manufacturing cost - cost of finished goods manufactured

$1,430,000 = $1,354,000 + total manufacturing cost - $1,430,000

So, the total manufacturing cost is

= $1,506,000

We now find out the purchase amount which equal to

= Direct materials used + ending direct material inventory - beginning direct material inventory

= $1,196,000 + $884,000 - $962,000

= $1,118,000