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The following calendar year-end information is taken from the December 31, 2005

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Question;"The following calendar year-end information is taken from the December 31, 2005, adjusted trial balance and other records of Plaza Company.Advertising expense........................ $ 30,750Depreciation expense?Office equipment......... 9,250Depreciation expense?Selling equipment......... 10,600Depreciation expense?Factory equipment........ 35,550Factory supervision......................... 104,600Factory supplies used....................... 9,350Factory utilities............................ 35,000InventoriesRaw materials, December 31, 2004............ 168,850Raw materials, December 31, 2005............ 184,000Goods in process, December 31, 2004......... 17,700Goods in process, December 31, 2005......... 21,380Finished goods, December 31, 2004........... 169,350Finished goods, December 31, 2005........... 138,490Direct labor.............................. 677,480Income taxes expense....................... 235,725Indirect labor............................. 58,875Miscellaneous production costs................ 10,425Office salaries expense...................... 65,000Raw materials purchases..................... 927,000Rent expense?Office space.................. 24,000Rent expense?Selling space.................. 28,100Rent expense?Factory building............... 78,800Maintenance expense?Factory equipment........ 37,400Sales................................... 4,527,000Sales discounts............................ 64,500Sales salaries expense....................... 394,5601. Prepare the company?s 2005 manufacturing statement.2. Prepare the company?s 2005 income statement that reports separate categories for (a) sellingexpenses and (b) general and administrative expenses.3. Compute the (a) inventory turnover, defined as cost of goods sold divided by average inventory, and (b) days' sales in inventory, defined as 365 times ending inventory divided by cost of goods sold, for both its raw materials inventory and its finished goods inventory. (To compute turnover and days' sales in inventory for raw materials, use raw materials used rather than cost of goods sold.) Discuss some possible reasons for differences between these ratios for the two types of inventories. Round answers to one decimal place.

 

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