Question

Place formulas in row 16 to autó calculate net income after each event, and add 1 equity Notice that you must enter the events since only the first ofe Spreadsheet Tips . The column widths are set by choosing Format, then Column, and then Width 2. The shad column and choosing Format, ding in columns B. N,and T is added by highlighting a els, and then clicking on the tab titiled Patterns and choosing a color way to add a column or row. For example, the formula in cell sum function is an C16 is SUMIC6.CIS) 4 As an cumple of the formulas in column S (net income,the formula in cell $7 is 07-07 5. If you find that some of the columns are too far to the right to appear on your screen, you can set the zoom level to show the entire spreadsheet. The zoom is set by choosing View, then Zoom, and then clicking on Custom and typing "100 percent" in the box. The shortcut imethbod to et the roo on theright side of the top tool bar that appears immediately below the menu. SIVE PROBLEM Magnificent Modems, Inc., makes modem cards that are used in notebook computers. The company completed the following transactions during 2014. All purchases and sales were made with cash 1. Acquired $750,000 of cash from the owners 筝Purchased S270.000 of manufacturing equipment. The equipment has a S30.000 salvage nd a four-year useful life. Label the purchase of the equipment as Event 2a and the recognition of depreciation as Event 2b. 3. The company started and completed 5,000 modems. Direct materials purchased and used amounted to $40 per unit. 4. Direct labor costs amounted to $25 per unit. 5. The cost of manufacturing supplies used amounted to $4 per unit. 6. The company paid $50,000 to rent the manufacturing facility

Answer 1

Equity Assets Manuf. Equipm + Inventory Office equipmn Comm. Stock Ret. Earning 750,000 + Event No. Cash Rev = Net Inc. 270,000 + (60,000) + 600,000 - 8 39,000 = (12,000) - 10 Chk fig 210,000 + 27,000 750,000 31,050 600,000 568,950 31,050

Maginficient Modems Inc Income Statement For the period ended December 31 2014 Amount Particulars Sales Cost of goods sold Gross Margin Sales Commission Depreciation expense Administrative expense Net Income 600000 395000 205000 30000 72000 71950 31050 Maginficient Modems Inc. Balance Sheet As of December 31 2014 Amount Particulars Assets Cash Manufacturing equipment, net of Acc Depreciation 544,050 210,000 27,000 781,050 Office equipment, net of Acc. Depreciation Finished goods inventor Total assets Equity Common stock Retained earnings Total stock holders equity 750,000 31,050 781,050

Working Notes Event 2 - Purchase of Manufacturing equipment Manufacturing equipment purchased Salvage value Balance value Life in years Depreciation for year (Balance life /Life in yea 270000 30000 240000 60000 Event 3 Direct materials purchased for modems manufactured Completed no. of modems Direct material cost per unit Total cost of direct material 5000 40 200000 Event 4 Direct labor for modems manufactured Completed no. of modems Cos per unit Total labour cost 5000 25 125000 Event 5 Cost of manufacturing supplies Completed no. of modems Cos per unit Total labour cost 5000 20000 Event 6 Rent paid for manufacturing facility 50000 Event 7 Sales @ $120 per unit of 5000 units Cost of goods sold Direct material Direct labor Manufacturing supplies 600000 200000 125000 20000 345000 Event 8 Sales commission @ $6 30000 Event 9 - Equipment for administrative offices Cost of equipment Salvage value Balance value Useful life Annual depreciation 39000 3000 36000 12000