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EXAMPLEWITHSOLUTION.docxExample of assignment with answer
The following information pertains to the York Company for the year ending December 31, 2020
REQUIRED
1. Prepare a COGM statement
2. Prepare an income statement [ assume interest expense to be $13000 and tax rate to be 25%]
Table 1
Name of company : York Company
Statement of COGM
Date : Dec 31, 2020
|
Direct Materials |
$ |
$ |
|
Beginning Inventory of RM |
33000 |
|
|
Add Purchases of RM |
220,000 |
|
|
Cost of RM available for sale |
253,000 |
|
|
Less: Ending Inventory for RM |
(22,000) |
|
|
Direct materials used |
|
231,000 |
|
Direct Labour |
|
110,000 |
|
Manufacturing Overhead |
|
|
|
Indirect Materials |
9,000 |
|
|
Indirect Labour |
14,000 |
|
|
Depreciation of factory equipment |
50,000 |
|
|
Depreciation of factory buildings |
29000 |
|
|
Manufacturing overhead |
|
102,000 |
|
Manufacturing cost |
|
443,000+ |
|
ADD : Beginning work in Process [WIP] |
|
54,000 |
|
Total Manufacturing costs |
|
497,000 |
|
LESS : Ending WIP |
|
(45000) |
|
COGM |
|
452,000 |
Explanation of Abbreviations
RM = Raw Material
( ) = -
INCOME STATEMENT
Name of company: York Company
Statement of income Statement
Date : Dec 31,2020
|
|
$ |
$ |
|
Total Sales Or Revenue |
|
840,000 |
|
LESS: sales return and allowances |
|
(17,000) |
|
Sales Discount |
|
(12000) |
|
Net Sales |
|
811,000 |
|
Cost Of Goods Sold [COGS] |
|
|
|
Beginning finished goods |
124,000 |
|
|
ADD : COGM |
452,000 |
|
|
Goods available for sale |
576,000 |
|
|
Less: Ending Finished Goods |
(115,000) |
|
|
COGS |
|
(461,000) |
|
Gross Profit |
|
350,000 |
|
Less: Operating Expenses |
|
|
|
Selling Expenses |
130,000 |
|
|
General & Administration cost |
15000 |
|
|
Total operating expenses |
|
(145,000) |
|
Operating Income [EBIT] |
|
205,000 |
|
Interest Expense |
|
(13,000) |
|
Profit before tax [EBT] |
|
192,000 |
|
Tax |
|
(48000)* |
|
Net Income |
|
144,000 |
Working:
Tax* = EBT x Tax rate = 192000 x 0.25 = 48,000
