Question

Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $672,000; Raw Materials Inventory, $68,000; Work in Process Inventory, $34,000; Finished Goods Inventory, $55,000; Common Stock, $589,000; and Retained Earnings, $240,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

1. Paid $24,000 of research and development costs.

2. Paid $61,000 for raw materials that will be used to make eBook readers.

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

4. Paid $67,000 for salaries of selling and administrative employees.

5. Paid $92,000 for wages of production workers.

6. Paid $94,000 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 $14,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($94,000 – $14,000) ÷ 8 = $10,000.

8. Paid $120,000 to purchase manufacturing equipment.

9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $24,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($120,000 – $24,000) ÷ 8 = $12,000.

10. Paid $60,000 for rent and utility costs on the manufacturing facility.

11. Paid $72,000 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 $250,000 from work in process inventory to finished goods.

13. Sold 920 eBook readers for $424,000.

14. It cost Antioch $184,000 to make the eBook readers sold in Event 13.

1. 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.)

ANTIOCH COMPANY Schedule of Cost of Goods Manufactured and Sold For the Year Ended December 31, 2018 Beginning raw materials Inventory Purchases Raw materials available Ending raw materials inventory Raw materials used Labor Overhead Total manufacturing costs Beginning work in process inventory Total work in process inventory Ending work in process inventory Cost of goods manufactured Beginning finished goods inventory Goods available Ending finished goods inventory Cost of goods sold

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

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

Answer 1

c-1.

Antioch Company Schedule of Cost of Goods Manufactured and Sold For the year ended December 31, 2018
Beginning raw materials inventory	$ 68,000
Purchases	61,000
Raw materials available	129,000
Ending raw materials inventory	- 39,000
Raw materials used	90,000
Labor	92,000
Overhead	72,000
Total manufacturing costs	254,000
Beginning work in process inventory	34,000
Total work in process inventory	288,000
Ending work in process inventory	- 38,000
Cost of goods manufactured	250,000
Beginning finished goods inventory	55,000
Goods available	305,000
Ending finished goods inventory	- 121,000
Cost of Goods Sold	184,000

c-2.

Antioch Company Income Statement For the year ended December 31, 2018
Sales	$ 424,000
Cost of Goods Sold	- 184,000
Gross Profit	240,000
Operating Expenses
Salaries Expense	- 67,000
Research and Development Costs	- 24,000
Warehousing Expense	- 72,000
Depreciation Expense	- 10,000
Net Operating Income	$ 67,000

c-3.

Antioch Company Balance Sheet December 31, 2018
Assets
Cash	$ 506,000
Raw materials inventory	39,000
Work in process inventory	38,000
Finished goods inventory	121,000
Equipment	214,000
Accumulated Depreciation: Equipment	- 22,000
Total Assets	896,000
Stockholders Equity
Common Stock	589,000
Retained Earnings	307,000
Total Stockholders Equity	896,000