Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year 2: Cash, $671,000; Raw Materials Inventory, $69,000; Work in Process Inventory, $27,000; Finished Goods Inventory, $51,000; Common Stock, $599,000; and Retained Earnings, $219,000. Antioch experienced the following accounting events during Year 2. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions. Paid $24,000 of research and development costs. Paid $58,000 for raw materials that will be used to make eBook readers. Placed $96,000 of the raw materials cost into the process of manufacturing eBook readers. Paid $74,000 for salaries of selling and administrative employees. Paid $107,000 for wages of production workers. Paid $135,000 to purchase equipment used in selling and administrative offices. Recognized depreciation on the office equipment. The equipment was acquired on January 1, Year 2. It has a $15,000 salvage value and a six-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($135,000 – $15,000) ÷ 6 = $20,000. Paid $157,000 to purchase manufacturing equipment. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, Year 2. It has a $29,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($157,000 – $29,000) ÷ 8 = $16,000. Paid $61,000 for rent and utility costs on the manufacturing facility. Paid $72,000 for inventory holding expenses for completed eBook readers (rental of warehouse space, salaries of warehouse personnel, and other general storage cost). Completed and transferred eBook readers that had total cost of $248,000 from work in process inventory to finished goods. Sold 980 eBook readers for $425,000. It cost Antioch $215,600 to make the eBook readers sold in Event 13. Required: a. Show how these events affect the balance sheet, income statement, and statement of cash flows by recording them in a horizontal financial statements model. 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.
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year 2: Cash, $671,000; Raw Materials Inventory, $69,000; Work in Process Inventory, $27,000; Finished Goods Inventory, $51,000; Common Stock, $599,000; and
- Paid $24,000 of research and development costs.
- Paid $58,000 for raw materials that will be used to make eBook readers.
- Placed $96,000 of the raw materials cost into the process of manufacturing eBook readers.
- Paid $74,000 for salaries of selling and administrative employees.
- Paid $107,000 for wages of production workers.
- Paid $135,000 to purchase equipment used in selling and administrative offices.
- Recognized depreciation on the office equipment. The equipment was acquired on January 1, Year 2. It has a $15,000 salvage value and a six-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($135,000 – $15,000) ÷ 6 = $20,000.
- Paid $157,000 to purchase manufacturing equipment.
- Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, Year 2. It has a $29,000 salvage value and a eight-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($157,000 – $29,000) ÷ 8 = $16,000.
- Paid $61,000 for rent and utility costs on the manufacturing facility.
- Paid $72,000 for inventory holding expenses for completed eBook readers (rental of warehouse space, salaries of warehouse personnel, and other general storage cost).
- Completed and transferred eBook readers that had total cost of $248,000 from work in process inventory to finished goods.
- Sold 980 eBook readers for $425,000.
- It cost Antioch $215,600 to make the eBook readers sold in Event 13.
Required:
a. Show how these events affect the
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.
![---
### Antioch Company Financial Statements Model
#### Balance Sheet, Stockholders' Equity, Income Statement, and Statement of Cash Flow
This table provides a comprehensive financial statements model for Antioch Company. It is structured to show changes in various accounts based on different financial events. Below is the transcription of the table with an explanation of the columns and how to interpret the data.
#### Table Explanation
**Balance Sheet Section**
- **Assets:**
- **Cash**: 671,000
- **Raw Materials**: 69,000
- **Work in Process Inventory**: 27,000
- **Finished Goods**: 51,000
- **BV Office Furniture**: Blank (0)
- **BV Manufacturing Equipment**: Blank (0)
**Stockholders' Equity Section**
- **Common Stock**: 599,000
- **Retained Earnings**: 219,000
**Income Statement Section**
- **Revenue**: Blank (0)
- **Expense**: Blank (0)
- **Net Income**: Blank (0)
**Statement of Cash Flow Section**
- **Cash Flow**: Blank (0)
**Event No.:** This column is for identifying different financial events that impact the company's accounts. The table is prepared to account for up to 14 events.
#### Rows
- **Row 1** summarizes the current totals for each category.
- **Rows 2 to 14** are available to record additional transactions or changes that happen over time.
#### Totals
- The bottom row provides a sum for each column to show the overall total for each account after all recorded events.
This financial model helps visualize and track the flow of financial transactions across different accounts, ensuring that all changes are accurately reflected in the balance sheet, stockholders' equity, income statement, and cash flow statement.
---](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe9c485f-7800-42c6-9e2a-230c778c41ae%2Fb3edf71e-b9eb-4163-b373-acdb720add02%2Fx4pkn2q_processed.png&w=3840&q=75)
![**Antioch Company**
**Schedule of Cost of Goods Manufactured and Sold**
**For the Year Ended December 31, Year 2**
| Description | Amount ($) |
|----------------------------------------------|------------|
| Beginning raw materials inventory | 0 |
| Purchases | 0 |
| Raw materials available | 0 |
| Ending raw materials inventory | 0 |
| Raw materials used | 0 |
| Labor | 0 |
| Overhead | 0 |
| Total manufacturing costs | 0 |
| Beginning work in process inventory | 0 |
| Total work in process inventory | 0 |
| Ending work in process inventory | 0 |
| Cost of goods manufactured | 0 |
| Beginning finished goods inventory | 0 |
| Goods available | 0 |
| Ending finished goods inventory | 0 |
| Cost of goods sold | 0 |
**Explanation:**
The table above is a financial statement for Antioch Company, detailing the schedule of cost of goods manufactured and sold for the year ending on December 31, Year 2.
1. **Beginning Raw Materials Inventory**: This is the value of raw materials in stock at the beginning of the year, which is $0.
2. **Purchases**: This amount represents the cost of additional raw materials purchased during the year, which is also $0.
3. **Raw Materials Available**: The total raw materials available for manufacturing, which is the sum of the beginning raw materials inventory and purchases, results in $0.
4. **Ending Raw Materials Inventory**: The value of raw materials left at the end of the year is $0.
5. **Raw Materials Used**: Calculated by subtracting the ending raw materials inventory from the raw materials available, resulting in $0.
6. **Labor**: The total labor cost incurred during the year, which is $0.
7. **Overhead**: All other manufacturing costs, apart from raw materials and labor, also $0.
8. **Total Manufacturing Costs**: The sum of raw materials used, labor, and overhead, which equals $0.
9. **Beginning Work in Process Inventory**: The value of work in progress at the beginning of the year, which is $0.
10. **Total Work in Process Inventory**](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbe9c485f-7800-42c6-9e2a-230c778c41ae%2Fb3edf71e-b9eb-4163-b373-acdb720add02%2Fzvukzf_processed.png&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 6 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)