Solve the questions and financial statements

Mastery Problem: Introduction to Managerial Accounting Able Baker Charlie Company Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He's also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information. Managerial vs. Financial Select whether the following characteristics are most often associated with managerial accounting or financial accounting. Primarily used for internal decision making Generally Accepted Accounting Principles (GAAP) must be used Prepared statements usually pertain to the company as a whole rather than individual departments or products Information provided will often be subjective, such as estimated future results Often prepared on an as-needed basis rather than at fixed intervals Financial Statements Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company. Income Statement A Sample Company A Income Statement For the Year Ended December 31, 2018 Sales $42,000 $5,250 6,400 Finished goods inventory, January 1, 2048 Cost of goods manufactured Cost of finished goods available for sale Finished goods inventory, December 31, 20Y8 Cost of goods sold Gross profit Operating expenses: $11,650 (400) (11,250) $30,750 Selling expenses $6,400 Administrative expenses 5,250 Total operating expenses (11,650) Net income $19,100 Sample Company B Income Statement For the Year Ended December 31, 20Y8 Sales $42,000 $5,250 6,400 $11,650 Beginning inventory Net purchases Inventory available for sale Ending inventory Cost of goods sold Gross profit (400) (11,250) $30,750 Operating expenses: Selling expenses $6,400 Administrative expenses 5,250 Total operating expenses (11,650) Net income $19,100 Sample Company C Balance Sheet December 31, 2018 Assets Cash $20,800 Accounts receivable (net) 10,000 6,000 Inventory Supplies Land 2,100 17,000 Total assets $55,900 Liabilities Accounts payable $17,800 Stockholders' Equity Common stock $19,000 19,100 Retained earnings Total stockholders' equity 38,100 Total liabilities and stockholders' equity $55,900 Costs and Balances At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he's collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured. Data for February Decrease in materials inventory $2,700 Materials inventory on Feb. 28 50% of materials inventory on Jan. 31 Direct materials purchased $12,300 Direct materials used 3 times the direct labor incurred Total manufacturing costs incurred in period $29,400 Total manufacturing costs incurred in period 70% of Cost of Goods Manufactured Total manufacturing costs incurred in period $9,000 less than Cost of Goods Sold Account Balances Account Jan. 31 Feb. 28 Costs Incurred Materials Inventory Direct Materials Used s 27,000 Direct Labor Incurred Work in Process Inventory Finished Goods Inventory 16,000 Factory Overhead Incurred Cost of Goods Sold Mastery Problem: Introduction to Managerial Accounting Able Baker Charlie Company Charles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused about the many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He's also wondering how to set up his inventory, how to classify the costs of his business, and how to fill in some missing information. Managerial vs. Financial Select whether the following characteristics are most often associated with managerial accounting or financial accounting. Primarily used for internal decision making Generally Accepted Accounting Principles (GAAP) must be used Prepared statements usually pertain to the company as a whole rather than individual departments or products Information provided will often be subjective, such as estimated future results Often prepared on an as-needed basis rather than at fixed intervals Financial Statements Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets C and D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company. Income Statement A Sample Company A Income Statement For the Year Ended December 31, 2018 Sales $42,000 $5,250 6,400 Finished goods inventory, January 1, 2048 Cost of goods manufactured Cost of finished goods available for sale Finished goods inventory, December 31, 20Y8 Cost of goods sold Gross profit Operating expenses: $11,650 (400) (11,250) $30,750 Selling expenses $6,400 Administrative expenses 5,250 Total operating expenses (11,650) Net income $19,100 Sample Company B Income Statement For the Year Ended December 31, 20Y8 Sales $42,000 $5,250 6,400 $11,650 Beginning inventory Net purchases Inventory available for sale Ending inventory Cost of goods sold Gross profit (400) (11,250) $30,750 Operating expenses: Selling expenses $6,400 Administrative expenses 5,250 Total operating expenses (11,650) Net income $19,100 Sample Company C Balance Sheet December 31, 2018 Assets Cash $20,800 Accounts receivable (net) 10,000 6,000 Inventory Supplies Land 2,100 17,000 Total assets $55,900 Liabilities Accounts payable $17,800 Stockholders' Equity Common stock $19,000 19,100 Retained earnings Total stockholders' equity 38,100 Total liabilities and stockholders' equity $55,900 Costs and Balances At the end of February, after the second month of operations of Able Baker Charlie Company, Charles shows you the data he's collected, but he was unable to figure out some of the amounts. Review the following data and fill in the missing amounts on the chart for Able Baker Charlie Company. Note: It may be helpful to use T accounts to map the flow the amounts through the manufacturing accounts and solve for the missing dollar values. It may also be helpful to review the steps for determining the cost of materials used, total manufacturing cost incurred, and cost of goods manufactured. Data for February Decrease in materials inventory $2,700 Materials inventory on Feb. 28 50% of materials inventory on Jan. 31 Direct materials purchased $12,300 Direct materials used 3 times the direct labor incurred Total manufacturing costs incurred in period $29,400 Total manufacturing costs incurred in period 70% of Cost of Goods Manufactured Total manufacturing costs incurred in period $9,000 less than Cost of Goods Sold Account Balances Account Jan. 31 Feb. 28 Costs Incurred Materials Inventory Direct Materials Used s 27,000 Direct Labor Incurred Work in Process Inventory Finished Goods Inventory 16,000 Factory Overhead Incurred Cost of Goods Sold