Explore BrainMass

Explore BrainMass

    Computing work-in-process inventory from balance sheet

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    On June 30, 2011, a tornado damaged Jensen Corporation's warehouse and factor completely destroying the work-in-process inventory. Neither the raw materials nor finished goods inventories were damaged. A physical inventory taken after the tornado revealed the following values:

    Raw materials $87,000
    Work-in-process 0
    Finished goods $151,000
    Total $238,000

    The inventory of January 1, 2011, consisted of the following:

    Raw materials $41,000
    work-in-process $128,000
    Finished goods $173,000
    Total $342,000

    A review of the books and records disclosed that the gross profit margin historically approximated 28% of sales. The sales total for the first six months of 2011 was $405,000. Raw material purchases totaled $150,000. Direct labor costs for this period were $112,000, and manufacturing overhead has historically been applied at 50% of direct labor.

    Compute the value of the work-in-process inventory lost at June 30, 2011. Show supporting computations.

    © BrainMass Inc. brainmass.com June 4, 2020, 2:33 am ad1c9bdddf
    https://brainmass.com/business/financial-statements/computing-work-process-inventory-balance-sheet-465678

    Solution Preview

    Dear student,

    Here is the answer:

    sales 405000
    less:gross margin 113400
    cost of sales 291600
    less:opening finished goods 173000
    ...

    Solution Summary

    The expert computes the work-in-process inventory from balance sheets.

    $2.19

    ADVERTISEMENT