Question

Munoz Manufacturing Company was started on January 1, 2018, when it acquired $90,000 cash by issuing common stock. Munoz immediately purchased office furniture and manufacturing equipment costing $8,400 and $34,900, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,300 salvage value and an expected useful life of four years. The company paid $11,600 for salaries of administrative personnel and $15,500 for wages to production personnel. Finally, the company paid $10,200 for raw materials that were used to make inventory. All inventory was started and completed during the year. Munoz completed production on 4,200 units of product and sold 3,250 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. (Round your answer to the nearest dollar amount.) e. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet. (Round your answer to the nearest dollar amount.) f. 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

Answer a) Calculation of Total Product Cost :- - Direct Material cost + Duect wages & Depreciation on Manufacturing equipment (manufactury overhead 2 $10, dvo+ $15500 + $7900 = $33600 Average cost per unit of Inventory Total Product cost No. of units produced $ 33600 - $ 8 4200 b) UUUUUUUUUUUUVVVVVVVVVVVVVV UUUUUUUU TENDER Calculation of cost of Goods sold a units sold during the year & Average cost per unit 2 3250 X $ 8 3 $ toovo Calculation of closing Inventory Balance = Closing Inventory units & average cost per unit = (4800 - 3&50) x $8 a $7600 calculation of Net Income - Net sales - Cost of Goods sold - salaries of administrative personnel - Depreciation of office furniture = (32 50x$ 15) - $26cho - $ 11600 - $1050 2 $10,100

e) earnings Amount = of Retained $ 10, 100 ta Calculation of Total Assets fixed Assets office furniture (8460-1050) = 7350 Manufacturing Equipment( 3496 - 7900) = 27000 Current Assets Inventory (stock) - 7600 6458,150 Total Assets § l,oo, loo Working Note a Depreciation on office furniture 8400 a $1050 cash Depreciation on Manufacturing Equipment 2 3490 - 336 $7900