Zhang Olsen Company had the following inventory balances at the beginning and end of 2014:
| Inventory Account | January 1
2014 ($) |
December 31
2014 ($) |
| Raw Material | 120,000 | 140,000 |
| Work in Process | 240,000 | 230,000 |
| Finished Goods | 300,000 | 330,000 |
During the year the company purchased $500,000 of raw material and spent $800,000 on direct labour. Manufacturing overhead costs were as under:
| Indirect Materials | 20,000 |
| Indirect Labour | 50,000 |
| Depreciation on Plant and Equipment | 200,000 |
| Electricity | 50,000 |
| Other | 60,000 |
Sales revenue was 2,210,000 for the year. Selling and administrative expenses for the year amounted to 220,000. The company’s tax rate is 40%.
Required:
- Prepare a schedule of cost of goods manufactured
- Prepare a schedule of cost of goods sold
- Prepare an income statement for the company
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