Question

Check my work Problem 10-23 Effect of product versus period costs on financial statements LO 10-2, 10-3 Solomon Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions and that financial statement data are prepared in accordance with GAAP. 1. Acquired $59,000 cash by Issuing common stock. 2. Paid $7.900 for the materials used to make its products, all of which were started and completed during the year 3. Pald salaries of $4,200 to selling and administrative employees. 4. Paid wages of $6,500 to production workers. 5. Paid $4,800 for furniture used in selling and administrative offices. The furniture was acquired on January 1 It had a $1.500 estimated salvage value and a three-year useful life. 6. Paid $10,200 for manufacturing equipment. The equipment was acquired on January 1 It had a $1.200 estimated salvage value and a three-year useful life. 7. Sold inventory to customers for $25,500 that had cost $13.900 to make Required Indicate how these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example. (Enter any decreases to account balances with a minus sign. In the Cash Flow column, indicate whether the item is an operating activity (OA), Investing activity (A) Financing activity (FA), or leave the cell blank If there is no effect.) Income Statement Cash Financial Statement Model Equity Other Common A Fum stock 59.000 Inventory Mamut Equip & Rot Ear How - Net Inc. Cash flow 59,000 59.000 FA < Prev 3 of 3 !!! Next >

Answer 1

Event No Income Statement - Expenses = Net Income Cash Flow ,200 = ($4,200) $59,000 FA ($7,900) OA $4,200) OA ($6,500) OA ($4,800) IA + Assets Equity Cash + Inventory + Manuf. Equip + Office Fur = Equity $59,000 + $59,000 + ($7,900) + $7,900 + ($4,200) + ($4,200) ($6,500) + $6,500 ($4,800) + $4,800 + ($1,100) ($1,100) ($10,200) + 1 $10,200 $3,000 + ($3,000) $25,500 + 1 + $25,500 + ($13,900) + + ($13,900) $50,900 + $3,500 $7,200 + $3,700 - $59,000 + $6,300 + + ($1,100) + ($10,200) IA $25,500 = - $13,900 = $25,500 - $19,200 - $25,500 ($13,900) $6,300 $25,500 OA |ОА $50,900 Total Staright Line Depreciation = (Cost - Salvage Value/Useful Life Manuf. Equip Office Fur Cost $10,200 $4,800 Salvage Value $1,200 $1,500 Useful life Depreciation $3,000 $1,100