Question

Walton Manufacturing Company was started on January 1, 2018, when it acquired $82,000 cash by issuing common stock. Walton immediately purchased office furniture and manufacturing equipment costing $9,100 and $25,700, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $3,800 salvage value and an expected useful life of three years. The company paid $11,700 for salaries of administrative personnel and $15,500 for wages to production personnel. Finally, the company paid $8,800 for raw materials that were used to make inventory. All inventory was started and completed during the year. Walton completed production on 4,000 units of product and sold 3,030 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) Required a. Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.) b. Determine the amount of cost of goods sold that would appear on the 2018 income statement (Do not round intermediate calculations.) c. Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.) d. Determine the amount of net income that would appear on the 2018 income statement e. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet f. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet Total product cost Average cost per un Cost of good sold b Ending inventory Rolained earning Total asset

Answer 1

1.

Product Cost
Depreciation on Manufacturing Equipment	$    7,300.00	=(25700-3800)/3
Wages	$ 15,500.00
Raw Materials	$    8,800.00
Total Product Cost	$ 31,600.00

Depreciation = (Original Value - Salvage Value) / Useful Life

Average Cost per unit = $31600 / 4000 = $7.90 per unit

2.
Cost of Good Sold = Units sold x Average cost per unit
= 3030 x $7.90 = $23937

3.
Ending Inventory Units = Units Produced - Units sold
= 4000 - 3030 = 970 units
Ending Inventory = 970 x $7.90 = $7663

4.
Net Income

Sales Revenue	$ 45,450.00
Cost of Goods Sold	$ 23,937.00
Gross Profit	$ 21,513.00
Depreciation Office Furniture	$    1,137.50
Salaries	$ 11,700.00
Net Income	$    8,675.50

5.
Retained Earnings = Beginning Balance + Net income
= 0 + $8675.5 = $8675.50

6.
Total Assets

Assets
Cash	$    92,650.00	=82000-9100-25700+45450
Inventory	$      7,663.00	=970*7.9
Office Furniture	$      7,962.50	=9100-1137.5
Manufacturing Equipment	$    18,400.00	=25700-7300
Total Assets	$ 126,675.50