Question

Antioch company makes

Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $674,000; Raw Mat Common Stock, $595,000; and Retained Earnings, $231,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions erials Inventory. $67,000; Work in Process Inventory, $23,000; Finished Goods inventory, $62,000; 1. Paid $25,000 of research and development costs. 2. Paid $58,000 for raw materials that will be used to make eBook readers. 3. Placed $96,000 of the raw materials cost into the process of manufacturing eBook readers. 4. Paid $62,000 for salaries of selling and administrative employees. 5. Paid $98,000 for wages of production workers. 6. Paid $65,000 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 $15,000 salvage value and a five-year ife. The amount of depreciation is computed as l(Cost-salvage)+ useful life, Specifically, ($65,000-$15,000)+5 $10,000. 8. Paid $119,000 to purchase manufacturing equipment. 9. Recognized deprecia tion on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $21,000 savage value and a seven-year life. The amount of depreciation is computed as ((Cost - salvage)+ useful life, Specifically. ($119,000-$21,000)+7- $14,0o0. 10. Paid $63,000 for rent and utility costs on the manufacturing facility 11. Paid $77.000 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 $240,000 from work in progess inventory to finished goods 3. Sold 990 eBook readers for $422,000 14. It cost Antioch $158,400 to make the eBook readers sold in Event 13.

Answer 1

1

Effect of each transaction

Assets

Stockholders Equity

Income Statement

Event No.

Cash

+

Raw Material

+

Work In Process Inventory

+

Finished Goods

+

Office Furniture

+

Manufacturing Equipment

=

Common Stock

+

Retained Earnings

Revenue

-

Expenses

=

Net Income

Cash Flow

$674,000

+

$67,000

+

$23,000

+

$62,000

+

+

=

$595,000

+

$231,000

-

=

1

($25,000)

+

+

+

+

+

=

+

-

$25,000

=

($25,000)

OA

2

($58,000)

+

$58,000

+

+

+

+

=

+

-

=

OA

3

+

($96,000)

+

$96,000

+

+

+

=

+

-

=

NA

4

($62,000)

+

+

+

+

+

=

+

-

$62,000

=

($62,000)

OA

5

($98,000)

+

+

$98,000

+

+

+

=

+

-

=

OA

6

($65,000)

+

+

+

+

$65,000

+

=

+

-

=

IA

7

+

+

+

+

($10,000)

+

=

+

-

$10,000

=

($10,000)

NA

8

($119,000)

+

+

+

+

+

$119,000

=

+

-

=

IA

9

+

+

+

+

+

($14,000)

=

+

-

$14,000

=

($14,000)

NA

10

($63,000)

+

+

$63,000

+

+

+

=

+

-

=

OA

11

($77,000)

+

+

+

+

+

=

+

-

$77,000

=

($77,000)

OA

12

+

+

($240,000)

+

$240,000

+

+

=

+

-

=

NA

13

$422,000

+

+

+

+

+

=

+

$422,000

-

=

$422,000

OA

14

+

+

+

($158,400)

+

+

=

+

-

$158,400

=

($158,400)

NA

Balance

$529,000

+

$29,000

+

$40,000

+

$143,600

+

$55,000

+

$105,000

=

$595,000

+

$231,000

$422,000

-

$346,400

=

$75,600