Question
Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $661,000; Raw Materials Inventory, $56,000; Work in Process
Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $661,000; Raw Materials Inventory, $56,000; Work in Process Inventory, $30,000; Finished Goods Inventory, $48,000; Common Stock, $595,000; and Retained Earnings, $200,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.
- Paid $23,000 of research and development costs.
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Paid $65,000 for raw materials that will be used to make eBook readers.
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Placed $102,000 of the raw materials cost into the process of manufacturing eBook readers.
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Paid $64,000 for salaries of selling and administrative employees.
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Paid $109,000 for wages of production workers.
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Paid $69,000 to purchase equipment used in selling and administrative offices.
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Recognized depreciation on the office equipment. The equipment was acquired on January 1, 2018. It has a $19,000 salvage value and a five-year life. The amount of depreciation is computed as [(Cost salvage) useful life]. Specifically, ($69,000 $19,000) 5 = $10,000.
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Paid $125,000 to purchase manufacturing equipment.
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Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $21,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost salvage) useful life]. Specifically, ($125,000 $21,000) 8 = $13,000.
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Paid $49,000 for rent and utility costs on the manufacturing facility.
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Paid $71,000 for inventory holding expenses for completed eBook readers (rental of warehouse space, salaries of warehouse personnel, and other general storage cost).
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Completed and transferred eBook readers that had total cost of $246,000 from work in process inventory to finished goods.
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Sold 860 eBook readers for $434,000.
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It cost Antioch $180,600 to make the eBook readers sold in Event 13.
Required
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Show how these events affect the balance sheet, income statement, and statement of cash flows by recording them in a horizontal financial statements model.
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Prepare a schedule of cost of goods manufactured and sold for the year.
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