Question

Zachary Company began operations on January 1, 2018, by issuing common stock for $37,000 cash. During 2018, Zachary received $56,200 cash from revenue and incurred costs that required $37,200 of cash payments.

Prepare a GAAP-based income statement and balance sheet for Zachary Company for 2018, under each of the following independent scenarios:

Zachary is a manufacturing company. The $37,200 was paid to purchase the following items:

(1) Paid $3,200 cash to purchase materials that were used to make products during the year.

(2) Paid $3,860 cash for wages of factory workers who made products during the year.

(3) Paid $8,940 cash for salaries of sales and administrative employees.

(4) Paid $21,200 cash to purchase manufacturing equipment. The equipment was used solely to make products. It had a four-year life and a $2,400 salvage value. The company uses straightline depreciation.

(5) During 2014, Lang started and completed 2,400 units of product. The revenue was earned when Lang sold 1,900 units of product to its customers.

Answer 1