Question

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, $674,000; Raw Materials Inventory, $67,000: Work in Process Inventory, $23,000; Finished Goods Inventory, $62,000; Common Stock, $595,000; and Retained Earnings, $231,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Paid $25,000 of research and development costs 2. Paid $58,000 for raw materials that will be used to make eBook readers. 3. Placed $96,000 of the raw materials cost into the process of manufacturing eBook readers 4. Paid $62,000 for salaries of selling and administrative emplayees 5. Paid $98,000 for wages of production workers. 6. Paid $65,000 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 $15,000 salvage value and a five-year life. The amount of depreciation is computed as (Cost - salvage)+ useful life). Specifically. ($65,000-$15,000)+5 $10,000. 8. Paid $119,000 to purchase manufacturing equipment. 9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $21,000 salvage value and a seven-year life. The amount of depreciation is computed as [Cost-salvage) ÷ useful life). Specifically, ($119,000- $21,000)+7-$14,000 10. Paid $63,000 for rent and utility costs on the manufacturing facility. 11. Paid $77000 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 990 eBook readers for $422,000. 4. It cost Antioch $158,400 to make the eBook readers sold in Event 13

Answer 1

Solution :-

Schedule of Cost of Goods Manufactured and Sold :-

ANTIOCH COMPANY
Schedule of Cost of Goods Manufactured and Sold
For the Year Ended December 31, 2018
Beginning raw materials Inventory	$67,000
Purchases	$58,000
Raw materials available	= $67,000 + $58,000 = $125,000
Ending raw materials inventory	= $125,000 - $96,000 = $29,000
Raw materials used	$96,000
Labor	$98,000
Overhead	$63,000
Total manufacturing costs	= $96,000 + $98,000 + $63,000 = $257,000
Beginning work in process inventory	$23,000
Total work in process inventory	= $257,000 + $23,000 = $280,000
Ending work in process inventory	= $280,000 - $240,000 = $40,000
Cost of goods manufactured	$240,000
Beginning finished goods inventory	$62,000
Goods available	= $240,000 + $62,000 = $302,000
Ending finished goods inventory	= $302,000 - $158,400 = $143,600
Cost of goods sold	$158,400

Income Statement :-

ANTIOCH COMPANY
Income Statement
For the Year Ended December 31, 2018
Sales revenue	$422,000
Cost of goods sold	$158,400
Gross margin	= $422,000 - $158,400 = $263,600
Selling and administration expense	= $25,000 + $62,000 + $10,000 + $14,000 + $77,000 = $188,000
Net income	= $263,600 - $188,000 = $75,000

C - 3 ) :-

Balance Sheet :-

ANTIOCH COMPANY
Balance Sheet
As of December 31, 2018
Assets :
Cash	= [$674,000 + $422,000 ] - [ $25,000 + 58,000 + $62,000 + $98,000 + $65,000 + $119,000 + $63,000 + 77,000 ] = $1,096,000 - $567,000 = $529,000
Raw materials	$29,000
Work in process inventory	$40,000
Finished goods	$143,600
Office furniture	= $65,000 - $10,000 = $55,000
Manufacturing equipment	= $119,000 - $14,000 = $105,000
Total assets	= $529,000 + $29,000 + $40,000 + $143,600 + $55,000 + $105,000 = $901,600
Stock holder's equity :
Common stock	$595,000
Retained earnings	= [ $231,000 + $422,000 ] - [ $25,000 + $62,000 + $10,000 + $14,000 + $77,000 + $158,400 ] = $306,600
Total stockholders’ equity	= $595,000 + $306,600 = $901,600