Balance Sheet and Direct Labor

Problem 1-7A (75 minutes)
Part 1

DE LEON COMPANY
Manufacturing Statement
For Year Ended December 31, 2013
Direct materials

Raw materials inventory, December 31, 2012
$ 166,850

Raw materials purchases 925,000

Raw materials available for use
1,091,850

Less raw materials inventory, December 31, 2013 182,000

Direct materials used

$ 909,850
Direct labor

675,480
Factory overhead

Depreciation expense—Factory equipment
33,550

Factory supervision
102,600

Factory supplies used
7,350

Factory utilities
33,000

Indirect labor
56,875

Miscellaneous production costs
8,425

Rent expense—Factory building
76,800

Maintenance expense—Factory equipment 35,400

Total factory overhead costs

354,000
Total manufacturing costs

1,939,330
Goods in process inventory, December 31, 2012

15,700
Total cost of goods in process

1,955,030
Less goods in process inventory, December 31, 2013

19,380
Cost of goods manufactured

$1,935,650
Problem 1-7A (Continued)
Part 2
DE LEON COMPANY
Income Statement
For Year Ended December 31, 2013
Sales

$4,525,000
Less sales discounts

62,500
Net sales

4,462,500
Cost of goods sold

Finished goods inventory, December 31, 2012
$ 167,350

Cost of goods manufactured 1,935,650

Goods available for sale
2,103,000

Less finished goods inventory, December 31, 2013 136,490

Cost of goods sold

1,966,510
Gross profit from sales

2,495,990
Operating expenses

Selling expenses

Advertising expense
28,750

Depreciation expense—Selling equipment
8,600

Rent expense—Selling space
26,100

Sales salaries expense 392,560

Total selling expenses

456,010 General and administrative expenses

Depreciation expense—Office equipment
7,250

Office salaries expense