Question

The following transactions pertain to Year 1, the first-year operations of Baird Company. All inventory was started and completed during Year 1. Assume that all transactions are cash transactions.

1.Acquired $4,000 cash by issuing common stock.

2.Paid $700 for materials used to produce inventory.

3.Paid $1,830 to production workers.

4.Paid $862 rental fee for production equipment.

5.Paid $110 to administrative employees.

6.Paid $120 rental fee for administrative office equipment.

7.Produced 320 units of inventory of which 230 units were sold at a price of $13 each.

Required

Prepare an income statement and a balance sheet in accordance with GAAP.

Answer 1

Baird Company
Income Statement
For the year ended on XXX
Sales		$2,990.00
Less: Cost Of Goods Sold
Direct Material	$700.00
Labour Cost	$1,830.00
Manufacturing Overhead- Rental Fee of Equipment	$862.00
Cost Of Goods Manufactured	$3,392.00
Less: Ending Inventory (3392/320*(320-230))	-$954.00
Cost Of Goods Sold		$2,438.00
Gross Profit		$552.00
Less: Operating Expenses
Administrative Employees Salaries	$110.00
Rental Fee For Admin Office Equipemnt	$120.00	$230.00
Net Income		$322.00
Baird Company
Balance Sheet
At the year ended on XXX
Assets
Current Assets
Cash (4000+2990-700-1830-862-110-120)	3368
Inventory	954	4322
Non Current Assets
Total Assets		4322
Liabilities And Shareholder'S Equity
Current Liabilities
Long Term Liabilities
Total Liabilities
Equity
Common Stock	4000
Net Income	322
Total Equity		4322
Total Liabilities And Equity		4322