The following balances are from the accounts of Crabtree Machining Company: January 1 (Beginning) December 31 (Ending) Direct materials inventory $ 115,200 $ 141,600 Work-in-process inventory 139,200 134,400 Finished goods inventory 117,120 108,000 Direct materials purchased during the year amount to $717,600, and the cost of goods sold for the year was $2,606,880. Required: Prepare a cost of goods sold statement.

Answer and Explanation:

The preparation of the cost of goods sold statement is presented below;

Crabtree Machining Company

Cost of goods sold statement

Beginning work in Process   $139,200

Manufacturing Costs    

Direct Material:    

Beginning Direct Material inventory $115,200  

Direct material purchases   $717,600  

Materials available$832,800  

Less: Ending Direct Material inventory - $141,600  

Direct Material used $691,200  

Conversion costs ($2,592,960  -$691,200) $1,901,760  (Balancing figure)

Total Manufacturing costs ($2,732,160 - $139,200) $2,592,960

Total cost of Work in process ($2,597,760 + $134,400) $2,732,160

Less: ending inventory Work in Process $134,400

Cost of goods manufactured ($2,714,880 -,$117,120)$2,597,760.

Beginning finished goods inventory $117,120

Finished goods savailable for sale ($2,606,880 + $108,000)  $2,714,880

Less: Ending finished goods inventory $108,000

Cost of goods sold     $2,606,880