Question

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, $665,000; Raw Materials Inventory, $57,000; Work in Process Inventory, $28,000; Finished Goods Inventory, $55,000; Common Stock, $589,000; and Retained Earnings, $216,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

Paid $27,000 of research and development costs.

Paid $52,000 for raw materials that will be used to make eBook readers.

Placed $90,000 of the raw materials cost into the process of manufacturing eBook readers.

Paid $73,000 for salaries of selling and administrative employees.

Paid $105,000 for wages of production workers.

Paid $70,000 to purchase equipment used in selling and administrative offices.

Recognized depreciation on the office equipment. The equipment was acquired on January 1, 2018. It has a $10,000 salvage value and a six-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($70,000 – $10,000) ÷ 6 = $10,000.

Paid $158,000 to purchase manufacturing equipment.

Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $25,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($158,000 – $25,000) ÷ 7 = $19,000.

Paid $56,000 for rent and utility costs on the manufacturing facility.

Paid $71,000 for inventory holding expenses for completed eBook readers (rental of warehouse space, salaries of warehouse personnel, and other general storage cost).

Completed and transferred eBook readers that had total cost of $251,000 from work in process inventory to finished goods.

Sold 920 eBook readers for $437,000.

It cost Antioch $138,000 to make the eBook readers sold in Event 13.

Problem 10-27 Part c

c-1. Prepare a schedule of cost of goods manufactured and sold for the year. (Amounts to be deducted should be indicated with a minus sign.)

c-2. Prepare a formal income statement for the year.

c-3. Prepare a balance sheet for the year.

Answer 1

Ans) C-1 a) Schedule of cost of goods manufactured

Beginning raw material inventory 57000

add; Purchases of raw materials 52000

Raw materials available 109000

less;Closing Raw materials -19000

Raw materials used 90000

add; labor 105000

overhead (19000+56000) 75000

Total manufacturing cost 270000

add; Beginning WIP 28000

less; closing WIP -47000

Cost  of goods manufactured 251000

b) Cost of goods sold-   

Cost of goods manufactured		251,000
add;Finished goods inventory		55,000
Goods available		306,000
less;Closing Finished goods		-168,000
Cost of goods sold		138,000

C-2   Income statement

Sales		437,000
less;Cost of goods sold		- 138,000
Research & dev.		- 27,000
Selling & Admn		- 73,000
Depreciation		- 10,000
Rent of warehouse		- 71,000
Net income		118,000

C-3 Balance Sheet

Assets
Cash		490,000
Raw materials		19,000
Closing WIP		47,000
Finished goods		168,000
Office equipment		60,000
Mfr. equipment		139,000
Total assets		923000
Liabilities
Stockholders equity
Common stock		589,000
Retained earnings		334,000
total equity		923000