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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, $674,000; Raw Materials Inventory, $52,000; Work in Process Inventory, $23,000; Finished Goods Inventory, $48,000; Common Stock, $601,000; and Retained Earnings, $196,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

1. Paid $32,000 of research and development costs.

2. Paid $57,000 for raw materials that will be used to make eBook readers.

3. Placed $95,000 of the raw materials cost into the process of manufacturing eBook readers.

4. Paid $65,000 for salaries of selling and administrative employees.

5. Paid $104,000 for wages of production workers.

6. Paid $66,000 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 $16,000 salvage value and a five-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($66,000 – $16,000) ÷ 5 = $10,000.

8. Paid $168,000 to purchase manufacturing equipment.

9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $28,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($168,000 – $28,000) ÷ 7 = $20,000.

10. Paid $53,000 for rent and utility costs on the manufacturing facility.

11. Paid $74,000 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 $244,000 from work in process inventory to finished goods.

13. Sold 810 eBook readers for $426,000.

14. It cost Antioch $170,100 to make the eBook readers sold in Event 13.

Answer 1

ANTIOCH COMPANY
Schedule of Cost of Goods Manufactured and Sold
For the Year Ended December 31, 2018
Beginning raw materials inventory	52000
Purchases	57000
Raw materials available	109000
Ending raw materials inventory	-14000
Raw materials used	95000
Labor	104000
Overhead*	73000
Total manufacturing costs	272000
Beginning work in process inventory	23000
Total work in process inventory	295000
Ending work in process inventory	-51000
Cost of goods manufactured	244000
Beginning finished goods inventory	48000
Goods available	292000
Ending finished goods inventory	-121900
Cost of goods sold	170100

Working:

*Overhead
Depreciation on manufacturing equipment	20000
Rent and utility	53000
Overhead	73000

ANTIOCH COMPANY
Income Statement
For the Year Ended December 31, 2018
Sales revenue	426000
Cost of goods sold	170100
Gross margin	255900
Selling and administrative expense*	181000
Net income	74900

Working:

*Selling and administrative expense
Salaries	65000
Depreciation on office equipment	10000
Inventory holding expenses	74000
Research and development expense	32000
Selling and administrative expense	181000

ANTIOCH COMPANY
Balance Sheet
As of December 31, 2018
Assets
Cash*	481000
Raw materials inventory	14000
Work in process inventory	51000
Finished goods inventory	121900
Manufacturing equipment ($168000 - $20000)	148000
Office equipment ($66000 - $10000)	56000
Total assets	871900
Stockholders' Equity
Common stock	601000
Retained earnings ($196000 + $74900)	270900
Total stockholders' equity	871900

Working:

*Cash
Beginning balance	674000
Research and development costs	-32000
Raw material purchases	-57000
Salaries	-65000
Wages	-104000
Office equipment	-66000
Manufacturing equipment	-168000
Rent and utility costs	-53000
Inventory holding expenses	-74000
Sale proceeds	426000
Ending balance	481000