Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2014: Cash, $660,000; Raw Materials Inventory, $51,000; Work in Process Inventory, $18,000; Finished Goods Inventory, $43,000; Common Stock, $583,000; and Retained Earnings, $189,000. Antioch experienced the following accounting events during 2014. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

1.

Paid $23,000 of research and development costs.

2.

Paid $47,000 for raw materials that will be used to make eBook readers.

3.

Placed $83,000 of the raw materials cost into the process of manufacturing eBook readers.

4.

Paid $60,000 for salaries of selling and administrative employees.

5.

Paid $91,000 for wages of production workers.

6.

Paid $90,000 to purchase equipment used in selling and administrative offices.

7.

Recognized depreciation on the office equipment. The equipment was acquired on January, 1, 2014. It has a $10,000 salvage value and a five-year life. The amount of depreciation is computed as [(Cost salvage) useful life]. Specifically, ($90,000 $10,000) 5 = $16,000.

8.

Paid $165,000 to purchase manufacturing equipment.

9.

Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2014. It has a $25,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost salvage) useful life]. Specifically, ($165,000 $25,000) 7 = $20,000.

10.

Paid $45,000 for rent and utility costs on the manufacturing facility.

11.

Paid $70,000 for inventory holding expenses for completed eBook readers (rental of warehouse space, salaries of warehouse personnel, and other general storage cost).

12.

Completed and transferred eBook readers that had total cost of $240,000 from work in process inventory to finished goods.

13.

Sold 1,000 eBook readers for $420,000.

14.

It cost Antioch $220,000 to make the eBook readers sold in Event 13.

Required

a.

Show how these events affect the balance sheet, income statement, and statement of cash flows by recording them in a horizontal financial statements model. In the Cash Flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), a financing activity (FA) and net change in cash (NC). The letters NA indicate that an element is not affected by the event. (Enter any decreases to account balances and cash outflows with a minus sign.)

ANTIOCH COMPANY

Financial Statements Model

Event No.

Assets

=

Stockholders Equity

Income Statement

Statement of Cash Flow

Cash

+

Raw Materials

+

Work in Process Inventory

+

Finished Goods

+

Office Furniture

+

Manufacturing Equipment

=

Common Stock

+

Retained Earnings

Revenue

Expense

=

Net Income

660,000

+

51,000

+

18,000

+

43,000

+

+

=

583,000

+

189,000

=

1.

+

+

+

+

+

=

+

=

2.

+

+

+

+

+

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+

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3.

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4.

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5.

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+

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6.

+

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+

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+

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7.

+

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8.

+

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+

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9.

+

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10.

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+

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+

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11.

+

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12.

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13.

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14.

+

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+

=

Total

+

+

+

+

+

=

+

=

c-1.

Prepare a schedule of cost of goods manufactured and sold for the year. (Amounts to be deducted should be indicated with a minus sign.)

ANTIOCH COMPANY
Schedule of Cost of Goods Manufactured and Sold
For the Year Ended December 31, 2014
Beginning raw materials Inventory
Purchases
Raw materials available
Ending raw materials inventory
Raw rate used
Labor
Overhead
Total manufacturing costs
Beginning work in process inventory
Total work in process inventory
Ending work in process inventory
Cost of goods manufactured
Beginning finished goods inventory
Goods available
Ending finished goods inventory
Cost of goods sold

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

ANTIOCH COMPANY
Income Statement
For the Year Ended December 31, 2014

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

ANTIOCH COMPANY
Balance Sheet
As of December 31, 2014
Assets
Total assets	$0
Stockholders Equity
Total stockholders equity	$0