Question

Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $676,000; Raw Materials Inventory, $59,000; Work in Process Inventory, $29,000; Finished Goods Inventory, $61,000; Common Stock, $597,000; and Retained Earnings, $228,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

1. Paid $24,000 of research and development costs.

2. Paid $48,000 for raw materials that will be used to make eBook readers.

3. Placed $102,000 of the raw materials cost into the process of manufacturing eBook readers.

4. Paid $73,000 for salaries of selling and administrative employees.

5. Paid $92,000 for wages of production workers.

6. Paid $93,000 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 $13,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($93,000 – $13,000) ÷ 8 = $10,000.

8. Paid $126,000 to purchase manufacturing equipment.

9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $21,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($126,000 – $21,000) ÷ 7 = $15,000.

10. Paid $46,000 for rent and utility costs on the manufacturing facility.

11. Paid $73,000 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 $250,000 from work in process inventory to finished goods.

13. Sold 950 eBook readers for $435,000.

14. It cost Antioch $199,500 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	not attempted
Purchases	not attempted
Raw materials available	0
Ending raw materials inventory	not attempted
Raw materials used	0
Labor	not attempted
Overhead	not attempted
Total manufacturing costs	0
Beginning work in process inventory	not attempted
Total work in process inventory	0
Ending work in process inventory	not attempted
Cost of goods manufactured	0
Beginning finished goods inventory	not attempted
Goods available	0
Ending finished goods inventory	not attempted
Cost of goods sold	$0

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

ANTIOCH COMPANY
Income Statement
For the Year Ended December 31, 2018
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
not attempted

1. c-3. Prepare a balance sheet for the year.

ANTIOCH COMPANY
Balance Sheet
As of December 31, 2018
Assets
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
Total assets	$0
Stockholders’ Equity
not attempted	not attempted
not attempted	not attempted
not attempted	not attempted
Total stockholders’ equity	$0

Answer 1

1.

Shedule of Cost of Goods ManufacturedandSold For the Year Ended December 31,2018

Beginning Raw Materials Inventory	$59,000
Purchases	$48,000
Raw Materials Available	$107,000
Ending Raw Materials Inventory ($107,000-$102,000)	$5,000
Raw Materials Used	$102,000
Labor	$92,000
Overheads ($15,000 +$46,000)	$61,000
Total Manufacturing Cost	$255,000
Beginning Workin Process Inventory	$29,000
Total Work in process inventory	$284,000
Ending Work in Process Inventory ($284,000 -$250,000)	$34,000
Cost of Goods Manufactured	$250,000
Beginning Finished Goods Inventory	$61,000
Goods Available	$311,000
Ending Finished Goods Inventory ($311,000 -$199,500)	$111,500
Cost of Goods Sold	$199,500

b. Antioch Company Income Statement For the Year Ended December 31,2018

Sales Revenue	$435,000
Cost of Goods Sold	$199,500
Gross Margin	$235,500
Selling and Administrative Expenses ($73,000+$10,000+$73,000+$24,000)	$180,000
Net Income	$55,500

c). Antioch Company Balance Sheet As of December 31,2018

Assets
Cash ($676,000-$24,000-$48,000-$73,000-$92,000-$93,000-$126,000-$46,000-$73,000+$435,000)	$536,000
Raw Materials Inventory	$5,000
Work In Process Inventory	$34,000
Finished Goods Inventory	$111,500
Office Equipment	$93,000
Manufacturing Equipment	$126,000
(-) Accumulated Depreciation (-$10,000+-$15,000)	$(25,000)
Total Assets	$880,500
Liabilities
Stockholders Equity
Common Stock	$597,000
Retained Earnings ($228,000 + $55,500)	$283,500
Total Liabilities	$880,500