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Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $672,000; Raw Materials Inventory, $56,000; Work in Process Inventory, $19,000; Finished Goods Inventory, $48,000; Common Stock, $599,000; and Retained Earnings, $196,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactionss are cash transactions. 1. Paid $31,000 of research and development costs. 2. Paid $57,000 for raw materials that will be used to make eBook readers. 3. Placed $89,000 of the raw materials cost into the process of manufacturing eBook readers. 4. Paid $68,000 for salaries of selling and administrative employees. 5. Paid $102,000 for wages of production workers. 6. Paid $139,000 to purchase equipment used in selling and administrative offices. 7. Recognized depreciation on the office equipment. The equipment was acquired on January 1, 2018. It has a $19,000 salvage value and a six-year life. The amount of depreciation is computed as [(Cost - salvage) useful life] Specifically, ($139,000 $19,000) 6 $20,000. 8. Paid $111,000 to purchase manufacturing equipment. 9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $27,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost - salvage) useful life]. Specifically, ($111,000 $27,000) 7 = $12,000. 10. Paid $63,000 for rent and utility costs on the manufacturing facility. 11. Paid $75,000 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 $257,000 from work in process inventory to finished goods 13. Sold 810 eBook readers for $439,000. 14. It cost Antioch $121,500 to make the eBook readers sold in Event 13 Show how these events affect the balance sheet, income statement, and statement of cash flows by recording them in a horizontal financial statements model. (Enter any decreases to account balances and cash outflows with a minus sign. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), affected, leave the cell blank.) financing activity (FA). If the item is not or ANTIOCH COMPANY Financial Statements Model Stockholders' Equity Income Statement Assets Event No. Statement of Cash Flow Work in Process Inventory Manufacturing Equipment Common Stock Retained + Raw Materials Finished Goods Office Furniture Cash Revenue Expense Net Income + + + + + Earnings 56,000 599,000+ 196,000 672,000 19,000 48,000 + + 1. (31,000) (31,000) (31,000) (31,000) + + + + 57,000 2. (57,000) + 3 (89,000) 89,000 + (68,000) (68,000) 4. (68,000) (68,000) + + + 5 102,000 (102,000) + + 139,000 6. (139,000) (20,000) (20,000) 7. (20,000) (20,000) + (111,000) 8. 111,000 + + (12,000) 9. + + + 63,000 10. (63,000) + (75,000) 11 (75,000) (75,000) (75,000) + + + = 257,000 (257,000) 12. + + + + 439,000 439,000 439,000 13 439,000 + + (121,500) (121,500) 14 (121,500) (121,500) + + 465,000 439,000 (315,500) 24,000 305,000 119,000 599,000 319,500 123,500 otal (105,500) 99,000 0 + III + + + + | + | + | + | + | + | + | + + + + + + | + 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.) Beginning raw materials Inventory Purchases $ 56,000 56,000 Raw materials available Ending raw materials inventory Raw materials used 56,000 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 56,000 19,000 75,000 75,000 48,000 123,000 Ending finished goods inventory Cost of goods sold 123,000 c-2. Prepare a formal income statement for the year. ANTIOCH COMPANY Income Statement For the Year Ended December 31, 2018 Sales revenue Cost of goods sold Gross margin Selling and administrative expense Sales revenue Net income c-3. Prepare a balance sheet for the year. Balance Sheet As of December 31, 2018 Assets Cash Raw materials inventory Work in process inventory Finished goods inventory Office equipment Manufacturing equipment Common stock 599,000 $ 599,000 Total assets Stockholders' Equity Common stock Retained earnings Retained earnings 196,000 196,000 Total stockholders' 392,000 equity
