Runcke Motor Company manufactures automobiles. During September 2011 the company purchased 5,000 head lamps at a cost of $9 per lamp. Runcke withdrew 4,650 lamps from the warehouse during the month. Fifty of these lamps were used to replace the head lamps in autos used by traveling sales staff. The remaining 4,600 lamps were put in autos manufactured during the month.
Of the autos put into production during September 2011, 90% were completed and transferred to the company’s storage lot. Of the cars completed during the month, 75% were sold by September 30.
Instructions
(a) Determine the cost of head lamps that would appear in each of the following accounts at September 30, 2011: Raw Materials, Work in Process, Finished Goods, Cost of Goods Sold, and Selling Expenses.
Raw Materials (5,000-4,650) X$9=$3,150
Work in Process Account (4,600 X10%) X$9 = $4,140
Finished Goods Account (4,600 X 90% X25%) X$9=$9,315
Cost of Goods Sold (4,600 X 90% X75%) X$9 = $27,945
Selling Expenses Account 50 X $9 =$450
Proof of head lamps allocated (5,000 X $9= $45,000)
Raw Materials $3,150
Work in Process 4,140
Finished Goods Account 9,315
Cost of Goods Account 27,945 Selling Expense Account 450
Total $45,000
(b) Write a short memo to the chief accountant, indicating whether and where each of the accounts in (a) would appear on the income statement or on the balance sheet at September 30, 2011.

To: Chief the Accountant
From: Clara Smith
Subject: Statement of Presentation of Accounts

There are two accounts that