Question

Finch Manufacturing Company was started on January 1, 2018, when it acquired $83,000 cash by issuing common stock. Finch immediately purchased office furniture and manufacturing equipment costing $8,400 and $31,600, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,600 salvage value and an expected useful life of four years. The company paid $11,200 for salaries of administrative personnel and $15,500 for wages to production personnel. Finally, the company paid $13,190 for raw materials that were used to make inventory. All inventory was started and completed during the year. Finch completed production on 4,300 units of product and sold 3,370 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

1. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet.(Round your answer to the nearest dollar amount.)

2. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet.(Round your answer to the nearest dollar amount.)

Answer 1

Part 1

amount of retained earnings that would appear on the December 31, 2018, balance sheet = $10329

Part 2

amount of total assets that would appear on the December 31, 2018, balance sheet = $93329

Direct materials	13190
Direct labor cost	15500
Depreciation of equipment (31600-3600)/4	7000
Total production costs	35690
Total units produced	4300
Unit product cost	$8.30

Sales (3370*15)	50550
Cost of goods sold (3370*8.30)	27971
Gross profit	22579
Selling and administrative expenses
Administrative salaries	11200
Depreciation of office furniture (8400/8)	1050
Net income	$10329

Retained earnings beginning balance	0
+ net income	10329
	10329
- dividends	0
Retained earnings ending balance	$10329

Cash	53660
Inventory (4300-3370)*8.30	7719
Equipment, net (31600-7000)	24600
Office furniture, net (8400-1050)	7350
Total assets	$93329

(83000-8400-31600-11200-15500-13190+(3370*15))