Question

Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $660,000; Raw Materials Inventory, $67,000; Work in Process Inventory, $35,000; Finished Goods Inventory, $47,000; Common Stock, $590,000; and Retained Earnings, $219,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

1. Paid $29,000 of research and development costs.

2. Paid $64,000 for raw materials that will be used to make eBook readers.

3. Placed $98,000 of the raw materials cost into the process of manufacturing eBook readers.

4. Paid $69,000 for salaries of selling and administrative employees.

5. Paid $102,000 for wages of production workers.

6. Paid $66,000 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 $16,000 salvage value and a five-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($66,000 – $16,000) ÷ 5 = $10,000.

8. Paid $157,000 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 eight-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($157,000 – $21,000) ÷ 8 = $17,000.

10. Paid $54,000 for rent and utility costs on the manufacturing facility.

11. Paid $77,000 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 $255,000 from work in process inventory to finished goods.

13. Sold 820 eBook readers for $421,000.

14. It cost Antioch $155,800 to make the eBook readers sold in Event 13.

c-1 Prepare a schedule of cost of goods manufactured and sold for the year. c-2. Prepare a formal income statement for the year. c-3. Prepare a balance sheet for the year.

Answer 1

C-1 Schedule of Cost of Goods Manufactured & Sold

Direct Material used in production = $ (67000+64000 - 98000)

= $ 33,000

D. Labour = $ 102,000

Factory O/h = $ 54,000

Cost of Goods Manufactured = $ 189,000

Cost of Goods Sold

=$ (189000 + 47000)

= $ 236,000

C-2 Income Statement

Income Statement of Antioch Company for the Year ended December 31, 2018
Particular	Amount $		Particular	Amount $
To COGS		236,000.00		By Sales		421,000.00
To R&D Costs	29,000.00		during the year
To Depreciation
(10000 + 17000)	27,000.00		By Closing Stock	223,200.00
To Selling & Adm.			(F.Goods)
salaries		69,000.00
To Net Profit
T/f to bal. sheet	283,200.00
		644,200.00				644,200.00

C-3 Balance Sheet

Closing Cash Balance

=$( 660,000 + 421,000 - 29,000 - 64,000 - 69,000 - 102,000 - 66,000 - 157,000 - 54,000 - 77,000)

= $ 463,000

Balance Sheet of Antioch Company as at December 31, 2018
Liabilities	Amount $		Assets	Amount $
Common Stock	590,000.00
Retained Earnings			Office & Manufacturing Equipments	196,000.00
(219,000 + 283,200)	502,200.00		Finished Goods Inventory	223,200.00
			Raw Material & WIP Inventory	210,000.00
			Cash	463,000.00
	1,092,200.00			1,092,200.00