Solution-Prepare a correct income statement for northpole

Prepare a correct income statement for northpole company

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Reference no: EM131706081

Problem - The Northpole Company started operation one year ago. The general manager asks your opinion of its first year's income statement which was prepared by a clerk who has very little knowledge of accounting. The income statement is as follows:

The Northpole Company Income Statement For Year Ending December 31, 1989
Sales (10,000 units @ $4)			$40,000
Cost of sales:
Materials purchased	$29,000
Direct labor	9,200
Factory overhead	4,600	$42,800

Less:
Material inventory, December 31	5,000
Work in process, December 31:
1,000 units, all materials
50% labor and overhead	800
Finiched goods, December 31 (1,000 units)	1,000	6,800	36,000
Gross Profit			$4,000
Operating expenses
Selling costs		$2,000
Administrative costs		3,000	5,000

Net loss			($1,000)

Required:

What is your opinion? If you think that the income statement is poorly or even falsely prepared, prepare a correct income statement for Northpole Company.

Support your statement with a Statement of Cost of Goods Manufactured.

Reference no: EM131706081

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Prepare a correct income statement for northpole company

Reference no: EM131706081

Reference no: EM131706081

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