Question
Adams Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that
Adams Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions and that financial statement data are prepared in accordance with GAAP.
- Acquired $51,000 cash by issuing common stock.
- Paid $7,500 for the materials used to make its products, all of which were started and completed during the year.
- Paid salaries of $3,900 to selling and administrative employees.
- Paid wages of $6,500 to production workers.
- Paid $4,400 for furniture used in selling and administrative offices. The furniture was acquired on January 1. It had a $1,400 estimated salvage value and a two-year useful life.
- Paid $9,400 for manufacturing equipment. The equipment was acquired on January 1. It had a $1,600 estimated salvage value and a two-year useful life.
- Sold inventory to customers for $25,800 that had cost $13,800 to make.
Required
Indicate how these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example. (Enter any decreases to account balances with a minus sign. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), financing activity (FA), or leave the cell blank if there is no effect.)
Answer is not complete.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Financial Accounting
Authors: John Hoggett, Lew Edwards, John Medlin, Keryn Chalmers, Jodie Maxfield, Andreas Hellmann, Claire Beattie
9th Edition
1118608208, 978-1118608203
