The following transactions pertain to 2018, the first year operations ofbThorton Company. All inventory was started and completed during 2018. Assume that all transactions are cash transactions.
1. Acquired $4,900 cash by issuing common stock.
2. Paid $720 for materials used to produce inventory.
3. Paid $1,850 to production workers.
4. Paid $966 rental fee for production equipment.
5. Paid $90 to administrative employees.
6. Paid $112 rental fee for administrative office equipment.
7. Produced 340 units of inventory of which 270 units were sold at
a price of $13 each.
Prepare an income statement and a balance sheet in accordance with GAAP.
Answer | ||
PREPARE INCOME STATEMENT : | ||
Sales (270*13) | 3,510 | |
Less: Cost of goods sold | ||
Material used | 720 | |
Direct labour | 1,850 | |
Manufacturing overhead | 966 | |
Total cost of goods manufactured | 3,536 | |
Less: Ending inventory (3536*70/340) | -728 | |
Cost of goods sold | -2,808 | |
Gross profit | 702 | |
Less: Operating expenses | ||
Administrative salaries | -90 | |
Rental fee for office equipemnt | -112 | -202 |
Net income | 500 | |
BALANCE SHEET : | ||
ASSETS | ||
CURRENT ASSETS | ||
Cash( 4900-720-1850-966-90-112+3510) | 4,672 | |
Inventory | 728 | 5,400 |
NON CURRENT ASSETS | ||
TOTAL ASSETS | 5,400 | |
LIABILITIES AND SHAREHOLDER'S EQUITY | ||
CURRENT LIABILITIES | ||
LONG TERM LIABILITIES | ||
SHAREHOLDER'S EQUITY | ||
Common stock | 4,900 | |
Net income | 500 | |
TOTAL SHAREHOLDER'S EQUITY | 5,400 | |
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY | 5,400 | |
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