ALABAMA CORPORATION

Goals and Objectives

Review of basic terminology

Review basic accounting and journal entries to reflect the flow of costs

Review preparation of income statement and supporting schedules for manufacturer

given end-of-year information

The company manufactures a single product, cleverly named Product X. The following information is

available for the calendar year 2018 just completed, during which they produced and sold 200,000

units. Sales for the year was $2,400,000. During the year, the company paid a sales commission of

5 percent of sales. The corporate income tax rate was 20%.

Direct materials purchases

Direct labor

Depreciation - factory equipment

Depreciation - factory building

Depreciation - headquarters building

Factory insurance

Property taxes:

Factory

Headquarters

Utilities - factory

Utilities - sales

Administrative salaries

Indirect labor salaries

Sales office salaries

Inventory Information

Raw materials

Work in process

Finished Goods

$300,000

140,000

45,000

30,000

50,000

15,000

20,000

18,000

34,000

1,800

150,000

156,000

90,000

12/31/2017 12/31/2018

$124,000 $152,000

124,000 130,000

109,000

118,904/nREQUIRED:

1. Post all of the above a summary entries in T accounts.

2. Compute the direct materials used in production.

3. Compute the prime cost.

4. Compute the conversion cost.

5. Prepare the Schedule of Direct Materials Used

6. Prepare the Schedule of Cost of Goods Manufactured

7. Prepare the Schedule of Cost of Goods Sold

8. Prepare an income statement for 2018, acceptable for GAAP in good form.

9. How many finished units of Product X do you thing were in the ending FG inventory?