Problem 10-27A (Algo) Schedule of cost of goods manufactured and sold LO 10-3
Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year 2: Cash, $666,000; Raw Materials Inventory, $52,000; Work in Process Inventory, $29,000; Finished Goods Inventory, $49,000; Common Stock, $597,000; and Retained Earnings, $199,000. Antioch experienced the following accounting events during Year 2. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.
Problem 10-27A (Algo) Schedule of cost of goods manufactured and sold LO 10-3 Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year 2: Cash, $666,000; Raw Materials Inventory, $52,000; Work in Process Inventory, $29,000; Finished Goods Inventory, $49,000; Common Stock, $597,000; and Retained Earnings, $199,000. Antioch experienced the following accounting events during Year 2. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Paid $25,000 of research and development costs. 2. Paid $53,000 for raw materials that will be used to make eBook readers. 3. Placed $88,000 of the raw materials cost into the process of manufacturing eBook readers. 4. Paid $71,000 for salaries of selling and administrative employees. 5. Paid $110,000 for wages of production workers. 6. Paid $97,000 to purchase equipment used in selling and administrative offices. 7. Recognized depreciation on the office equipment. The equipment was acquired on January 1, Year 2. It has a $17,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost - salvage) = useful life]. Specifically, ($97,000 - $17,000) = 8 = $10,000. 8. Paid $163,000 to purchase manufacturing equipment. 9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, Year 2. It has a $28,000 salvage value and a nine-year life. The amount of depreciation is computed as [(Cost - salvage) = useful life]. Specifically, ($163,000 - $28,000) = 9 = $15,000. 10. Paid $62,000 for rent and utility costs on the manufacturing facility. 11. Paid $75,000 for inventory holding expenses for completed eBook readers of warehouse space, salaries of warehouse personnel, and other general storage cost). 12. Completed and transferred eBook readers that had total cost of $248,000 from work in process inventory to finished goods. 13. Sold 950 eBook readers for $426,000. 14. It cost Antioch $171,000 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. 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. 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 sig the Statement of Cash Flows, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). If an item is not affected, leave the cell blank.) ANTIOCH COMPANY Financial Statements Model Balance Sheet Income Statement Assets Stockholders' Equity Event No. Statement of Cash Flow Cash + Raw Materials + Finished Goods BV Office Furniture Work in Process Inventory 29,000 + BV Manufacturing Equipment Common Stock Retained Earnings Revenue Expense - Net Income 666,000 + 52,000 + 49,000 + 597,000 + 199.000 - 1. + + + T + 2. + + + + = 3. + + + + + 4. + + + 5. + + + + + = 6. + + + + 7 + + + + 8. + + + 9. + + + | + 10. + + + 11 + + + + 12. + + + + + + 13. + + + + = + 14. + + + otal 666,000 + 52,000 + 29,000 + 49,000 + 0+ 0 = 597,000 + 199,000 0 0 = 0 0 0 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, Year 2 Beginning raw materials Inventory Purchases Raw materials available 0 Ending raw materials inventory Raw materials used 0 Labor Overhead Total manufacturing costs Beginning work in process inventory Total work in process inventory 0 Ending work in process inventory Cost of goods manufactured Beginning finished goods inventory Goods available Ending finished goods inventory Cost of goods sold 0 0 0 $ Prepare a formal income statement for the year. ANTIOCH COMPANY Income Statement For the Year Ended December 31, Year 2 Prepare a balance sheet for the year. ANTIOCH COMPANY Balance Sheet As of December 31, Year 2 Assets $ 0 Total assets Stockholders' Equity Total stockholders' equity $ 0
