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, $31,000; Finished Goods Inventory, $62,000; Common Stock, $600,000; and Retained Earnings, $233,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

1. Paid $27,000 of research and development costs.

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

3. Placed $92,000 of the raw materials cost into the process of manufacturing eBook readers.

4. Paid $64,000 for salaries of selling and administrative employees.

5. Paid $110,000 for wages of production workers.

6. Paid $117,000 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 $17,000 salvage value and a five-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($117,000 – $17,000) ÷ 5 = $20,000.

8. Paid $164,000 to purchase manufacturing equipment.

9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $29,000 salvage value and a nine-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($164,000 – $29,000) ÷ 9 = $15,000.

10. Paid $64,000 for rent and utility costs on the manufacturing facility.

11. Paid $78,000 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 $258,000 from work in process inventory to finished goods.

13. Sold 970 eBook readers for $424,000.

14. It cost Antioch $184,300 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 0 Ending raw materials inventory Raw materials used 0 Labor Overhead Total manufacturing costs 0 Beginning work in process inventory Total work in process inventory 0 Ending work in process inventory Cost of goods manufactured 0 Beginning finished goods inventory Goods available 0 Ending finished goods inventory Cost of goods sold $0

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

	ANTIOCH COMPANY Income Statement For the Year Ended December 31, 2014 sales revenue cost of goods sold gross margin selling and administration expense net income

c-3 Prepare a balance sheet for the year.

ANTIOCH COMPANY
Balance Sheet
As of December 31, 2014
Assets
Total assets	$0
Stockholders’ Equity
Total stockholders’ equity	$0

Answer 1

Schedule of Cost of Goods Manufactured and Sold
For the Year Ended December 31, 2018
Beginning raw materials Inventory	$          68,000
Purchases	$          57,000
Raw materials available	$       1,25,000
Ending raw materials inventory	$          33,000	=125000-92000
Raw materials used	$          92,000
Labor	$       1,10,000
Overhead	$          79,000	=15000+64000
Total manufacturing costs	$       2,81,000
Beginning work in process inventory	$          31,000
Total work in process inventory	$       3,12,000
Ending work in process inventory	$          54,000	=312000-258000
Cost of goods manufactured	$       2,58,000
Beginning finished goods inventory	$          62,000
Goods available	$       3,20,000
Ending finished goods inventory	$       1,35,700	=320000-184300
Cost of goods sold	$       1,84,300

ANTIOCH COMPANY
Income Statement
For the Year Ended December 31, 2014
Sales revenue	$       4,24,000
Cost of goods sold	$       1,84,300
Gross margin	$       2,39,700
Selling and administration expense	$       1,89,000	=64000+20000+78000+27000
Net income	$          50,700

ANTIOCH COMPANY
Balance Sheet
As of December 31, 2014
Assets
Cash	$       4,15,000	=672000-27000-57000-64000-110000-117000-164000-64000-78000+424000
Raw Material Inventory	$          33,000
Work in Process Inventory	$          54,000
Finished Goods Inventory	$       1,35,700
Office Equipment	$       1,17,000
Manufacturing Equipment	$       1,64,000
Less Accumulated Depreciation	$         -35,000	=-20000-15000
Total assets	$       8,83,700
Stockholders’ Equity
Common Stock	$       6,00,000
Retained Earnings	$       2,83,700	=233000+50700
Total stockholders’ equity	$       8,83,700