Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year $2$: Cash, $$666,000$; Raw Materials Inventory, $$59,000$; Work in Process Inventory, $$35,000$; Finished Goods Inventory, $$59,000$; Common Stock, $$589,000$; and Retained Earnings, $$230,000.$ Antioch experienced the following accounting events during Year $2.$ Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

Paid $$27,000$ of research and development costs.

Paid $$51,000$ for raw materials that will be used to make eBook readers.

Placed $$88,000$ of the raw materials cost into the process of manufacturing eBook readers.

Paid $$63,000$ for salaries of selling and administrative employees.

Paid $$102,000$ for wages of production workers.

Paid $$131,000$ to purchase equipment used in selling and administrative offices.

Recognized depreciation on the office equipment. The equipment was acquired on January $1,$ Year $2.$ It has a $$11,000$ salvage value and a six$-$year life. The amount of depreciation is computed as $[($Cost $$ salvage$)-$: useful life$].$ Specifically, $($$$131,000$ $$11,000)-$: $6=$ $$20,000.$

Paid $$183,000$ to purchase manufacturing equipment.

Recognized depreciation on the manufacturing equipment. The equipment was acquired on January $1,$ Year $2.$ It has a $$21,000$ salvage value and a nine$-$year life. The amount of depreciation is computed as $[($Cost $$ salvage$)-$: useful life$].$ Specifically, $($$$183,000$ $$21,000)-$: $9=$ $$18,000.$

Paid $$61,000$ for rent and utility costs on the manufacturing facility.

Paid $$78,000$ for inventory holding expenses for completed eBook readers $($rental of warehouse space, salaries of warehouse personnel, and other general storage cost$).$

Completed and transferred eBook readers that had total cost of $$245,000$ from work in process inventory to finished goods.

Sold $980$ eBook readers for $$431,000.$

It cost Antioch $$196,000$ to make the eBook readers sold in Event $13.$

Required:

a$.$ Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities $($OA$),$ investing activities $($IA$),$ or financing activities $($FA$).$ The first event is recorded as an example.

c$-1.$ Prepare a schedule of cost of goods manufactured and sold for the year.

c$-2.$ Prepare a formal income statement for the year.

c$-3.$ Prepare a balance sheet for the year.

d$.$ Distinguish between the product costs and the upstream costs that Antioch incurred.ANTIOCH COMPANY

Horizontal Financial Statements Model

$\backslash$table$[[$rent mber,Balance Sheet,Income Statement,Staten$],[$Assets$,=,$Stockholders' Equity$],[$Cash$,+,$Raw Materials,$+,$Work in Process Inventory,$+,$Finished Goods,$+,$Book Value Office Furniture,$+,$Book Value Manufacturing Equipment,$=,$Common Stock,$+,$Retained Earnings,Revenue,$-,$Expenses,$=,$Net Income$],[\backslash$table$[[$inning$],[$ance$]],666,000,+,59,000,+,35,000,+,59,000,+,,+,,=,589,000,+,230,000,,-,,=,,],[1.,(27,000),+,,+,,+,,+,,+,,=,,+,(27,000),,-,(27,000),=,(27,000),],[2.,(51,000),+,51,000,+,,+,,+,,+,,=,,+,,,-,,=,,(51,],[3.,,+,(88,000),+,88,000,+,,+,,+,,=,,+,,,-,,=,,],[4.,(63,000),+,,+,,+,,+,,+,,=,,+,(63,000),,-,(63,000),=,(63,000),],[5.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[6.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[7.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[8.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[9.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[10.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[11.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[12.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,],[13.,,+,,+,,+,,+,,+,,=,,+,,,-,,=,,]]$