Question

Problem 10-27 Schedule of cost of goods manufactured and sold LO 10-3 The following information applies to the questions displayed below. Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $678,000; Raw Materials Inventory, $71,000; Work in Process Inventory. $18,000: Finished Goods Inventory. $44,000 Common Stock, $599,000, and Retained Earnings, $212,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Paid $24,000 of research and development costs. 2. Paid $60,000 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 $80,000 for salaries of selling and administrative employees. 5. Paid $108,000 for wages of production workers 6. Paid $170,000 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 $10,000 salvage value and a eight year life. The amount of depreciation is computed as (Cost-salvage) - useful life] Specifically. ($170,000 - $10,000) - 8 - $20,000. 8. Paid $172,000 to purchase manufacturing equipment. 9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $28.000 salvage value and a eight year life. The amount of depreciation is computed as [(Cost-salvage) - useful life]. Specifically. ($172,000 - $28,000) - 8 = $18,000. 10. Paid $52,000 for rent and utility costs on the manufacturing facility.

Answer 1

Part a)

Accounting Equation of the Transaction:
	Assets:						=	Stockholders' Equity			Income Statement					Cash Flow Statement
Event	Cash +	RM +	WIP +	FG +	Equip-Office	Equip-manuf.	=	C S +	R E		Reve. -	Expenses	=	Net Income		Add/Deduct	Activity
Ob	678000	71000	18000	44000			=	599000	212000				=
1	-24000						=					-24000	=			-24000	OA
2	-60000	60000					=						=			-60000	OA
3		-89000	89000				=						=
4	-80000						=					-80000	=			-80000	OA
5	-108000		108000				=						=			-108000	OA
6	-170000				170000		=						=			-170000	IA
7					-20000		=					-20000	=
8	-172000					172000	=						=			-172000	IA
9			18000			-18000	=						=
10	-52000		52000				=						=			-52000	OA
11	-76000						=					-76000	=			-76000	OA
12			-246000	246000			=						=
13	435000						=				435000		=			435000	OA
14				-145800			=					-145800	=
Total	371000	42000	39000	144200	150000	154000	=	599000	212000		435000	-345800	=	89200		-307000
G total						900200	=	900200

c-1) Cost of goods manufactured:
			Amount $
Op WIP			18000
RM:
Op RM	71000
add:Purchase	60000
Total available	131000
Less:Cl RM	42000
RM used		89000
DL		108000
Overhead:
Depre of equip	18000
utilities & rent	52000
Overhead applied		70000
Manufacturing added			267000
Total WIP			285000
Less:Cl WIP			39000
Cost of Goods manufactured			246000
Add:Op FG			44000
Goods available for sale			290000
Less:Cl FG			144200
cost of goods sold			145800
c-2) Income Statement:
	Amount $
Sales	435000
Less:COGS	145800
Gross Profit	289200
Less:Admin & Selling exp.:
R&D cost	24000
salaries	80000
Depre.	20000
Holding cost	76000
Total admin & selling exp.	200000
Net Income	89200
c-3) Balance Sheet:
Assets	Amount $
Cash	371000	Note 1
Inventory:
RM	42000
WIP	39000
FG	144200
Equipments:
Manufacturing	172000
Admin	170000
Less:Acc. Dep.:
Manufacturing	-18000
Admin	-20000
Total Assets	900200
Liabilities & Equity:	Amount $
Common Stock	599000
RE (212000+89200)	301200
Total Liability & Equity	900200
Note1:Cash = (678000-24000-60000-80000-108000-170000-172000-52000-76000+435000)