Question

Vernon Manufacturing Company was started on January 1, 2018, when it acquired $75,000 cash by issuing common stock. Vernon immediately purchased office furniture and manufacturing equipment costing $9,100 and $32,000, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,200 salvage value and an expected useful life of four years. The company paid $11,400 for salaries of administrative personnel and $15,900 for wages to production personnel. Finally, the company paid $17,400 for raw materials that were used to make inventory. All inventory was started and completed during the year. Vernon completed production on 5,000 units of product and sold 4,060 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.) Required a. Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.) b. Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.) c. Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.) d. Determine the amount of net income that would appear on the 2018 income statement. (Round your answer to the nearest dollar amount.) e. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.) f. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.) Answer is complete but not entirely correct. $ $ Total product cost Average cost per unit Cost of goods sold Ending inventory Net income Retained earnings Total assets $ $ $ $ $ 24,238 ® 4.85 19,681 4,557 28,682 28,682 87,419

Answer 1

a) Total product cost = $15900 + $ 17400 = $ 33300

Average cost per unit  = $33300 /5000 units = $6.66 per unit

b) Cost of goods sold = $6.66 × 4060 units sold = $ 27039.6

c)Ending Inventory = 5000-4060 = 940 × 6.66 = $6260.4

d)Net Income = 4060 × $ 15 per unit sold = $ 60900

e)Retained Earnings = $60900

f) Total Assets(After depreciation) = $9100-9100/8 years + 32000-(32000-3200)/4 years =

7962.5 + 24800 = $32762.50