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Problem 10-27 Schedule of cost of goods manufactured and sold LO 10-3

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Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $675,000; Raw Materials Inventory, $62,000; Work in Process Inventory, $31,000; Finished Goods Inventory, $60,000; Common Stock, $591,000; and Retained Earnings, $237,000. 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 $64,000 for raw materials that will be used to make eBook readers.

3. Placed $85,000 of the raw materials cost into the process of manufacturing eBook readers.

4. Paid $60,000 for salaries of selling and administrative employees.

5. Paid $101,000 for wages of production workers.

6. Paid $137,000 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 $17,000 salvage value and a six-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($137,000 – $17,000) ÷ 6 = $20,000.

8. Paid $165,000 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 eight-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($165,000 – $21,000) ÷ 8 = $18,000.

10. Paid $61,000 for rent and utility costs on the manufacturing facility.

11. Paid $77,000 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 $258,000 from work in process inventory to finished goods.

13. Sold 920 eBook readers for $425,000.

14. It cost Antioch $193,200 to make the eBook readers sold in Event 13.

Problem 10-27 Part c

1. 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.)

1. 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.)

1. c-2. Prepare a formal income statement for the year.

1. c-3. Prepare a balance sheet for the year.

Answer 1

c-1) Cost of goods manufactured:
			Amount $
Op WIP			31000
RM:
Op RM	62000
add:Purchase	64000
Total available	126000
Less:Cl RM	41000
RM used		85000
DL		101000
Overhead:
Depre of equip	18000
utilities & rent	61000
Overhead applied		79000
Manufacturing added			265000
Total WIP			296000
Less:Cl WIP			38000
Cost of Goods manufactured			258000
Add:Op FG			60000
Goods available for sale			318000
Less:Cl FG			124800
cost of goods sold			193200
c-2) Income Statement:
	Amount $
Sales	425000
Less:COGS	193200
Gross Profit	231800
Less:Admin & Selling exp.:
R&D cost	25000
salaries	60000
Depre.	20000
Holding cost	77000
Total admin & selling exp.	182000
Net Income	49800
c-3) Balance Sheet:
Assets	Amount $
Cash	410000	Note 1
Inventory:
RM	41000
WIP	38000
FG	124800
Equipments:
Manufacturing	165000
Admin	137000
Less:Acc. Dep.:
Manufacturing	-18000
Admin	-20000
Total Assets	877800
Liabilities & Equity:	Amount $
Common Stock	591000
RE (237000+49800)	286800
Total Liability & Equity	877800
Note1:Cash = (675000-25000-64000-60000-101000-137000-165000-61000-77000+425000)