Question

Required information /The following information applies to the questions displayed below.) Solomon Company began operations on January 1, year 1. by issuing common stock for $38.000 cash. Durina vear 1 Solomon received $55,400 cash from revenue and incurred costs that required $38,400 of cash payments. Prepare a GAAP-based income statement and balance sheet for Solomon Company for year 1, for the below scenario: C. Solomon is a manufacturing company. The $38,400 was paid to purchase the following items: (1) Paid $3.300 cash to purchase materials that were used to make products during the year (2) Paid $4,160 cash for wages of factory workers who made products during the year. (3) Paid $15,640 cash for salaries of sales and administrative employees. (4) Paid $15,300 cash to purchase manufacturing equipment. The equipment was used solely to make products. It had a three-yean and a $2,400 salvage value. The company uses straight-line depreciation. (5) During year 1, Long started and completed 2,400 units of product. The revenue was earned when Lang sold 2,100 units of produ to its customers. Complete this question by entering your answer in the Income Statement Balance Sheet < Prex 9 of 15 !! Next >

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Answer 1

The income statement is prepared as follows:

B SOLOMON COMPANY Income statement for year 1 3 Revenue: 4 Sales revenue 55400 5 Cost of goods sold =(3300+4160+4300)/2400)*2100 6 Gross margin =B4-B5 7 Operating expenses: 8 Salaries expense 15640 9 Net income =B6-B8

Resulting values are as follows:

A B 1 SOLOMON COMPANY 2 Income statement for year 1 3 Revenue: 4 Sales revenue 55400 5 Cost of goods sold 10290 6 Gross margin 451101 7 Operating expenses: 8 Salaries expense 15640 9 Net income 29470 expense

Note: The cost of goods sold is calculated considering material cost, wages, and depreciation for the goods sold that is 2,100 units.

The balance sheet is prepared as follows:

А SOLOMON COMPANY Balance Sheet as of 12/31/year 1 Particulars Details (S) Amount (S) Assets 15 Current Assets: 16 CashT 1=55400+38000-38400 17 Inventory =((3300+4160+4300/2400*300 18 Total current assets =SUMC16:C17) 19 Property, plant and equipment 20 Equipment 15300 21 Less: Depreciation =-(15300-2400/3 =B20+B21 22 Net equipment =C21 23 Total Assets =C18+C22 24 Equity 25 Common stock 38000 26 Retained earnings 29470 27 Total Equity =SUM(B25:B26)

Resulting values are as follows:

A SOLOMON COMPANY Balance Sheet as of 12/31/year 1 Particulars Details Amount (S) Assets 15 Current Assets: 16 Cash 55000 17 Inventory 14701 18 Total current assets 564701 19 Property, plant and equipment 20 Equipment 15300 21 Less: Depreciation -4300 11000 22 Net equipment 11000 23 Total Assets 67470 Equity 25 Common stock 38000 26 Retained earnings 29470 27 Total Equity 67470 24