Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year 2: Cash, $677,000, Raw Materials Inventory, $65,000; Work In Process Inventory, $30,000; Finished Goods Inventory, $50,000; Common Stock, $591,000; and Retained Earnings, $231,000. Antioch experienced the following accounting events during Year 2. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Paid $28,000 of research and development costs. 2. Paid $52,000 for raw materials that will be used to make eBook readers. 3. Placed $91,000 of the raw materials cost into the process of manufacturing eBook readers. 4. Pald $73,000 for salaries of selling and administrative employees. 5. Pald $94,000 for wages of production workers. 6. Paid $82,000 to purchase equipment used in selling and administrative offices. 7. Recognized depreciation on the office equipment. The equipment was acquired on January 1, Year 2. It has a $12.000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost-salvage)+ useful life). Specifically. ($82,000-$12,000) + 7-$10,000. 8. Pald $148,000 to purchase manufacturing equipment. 9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, Year 2. It has a $29,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost-salvage)+ useful life). Specifically. ($148,000-$29,000)+7-$17,000. 10. Paid $51,000 for rent and utility costs on the manufacturing facility. 11. Paid $71,000 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 $242,000 from work in process Inventory to finished goods. 13. Sold 870 eBook readers for $426,000. 14. It cost Antioch $156,600 to make the eBook readers sold in Event 13.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question
Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year 2: Cash, $677,000, Raw
Materials Inventory, $65,000; Work In Process Inventory, $30,000; Finished Goods Inventory, $50,000; Common Stock, $591,000; and
Retained Earnings. $231,000. Antioch experienced the following accounting events during Year 2. Other than the adjusting entries for
depreciation, assume that all transactions are cash transactions.
1. Pald $28,000 of research and development costs.
2. Paid $52,000 for raw materials that will be used to make eBook readers.
3. Placed $91,000 of the raw materials cost into the process of manufacturing eBook readers.
4. Pald $73,000 for salaries of selling and administrative employees.
5. Pald $94,000 for wages of production workers.
6. Pald $82,000 to purchase equipment used in selling and administrative offices.
7. Recognized depreciation on the office equipment. The equipment was acquired on January 1, Year 2. It has a $12,000 salvage value
and a seven-year life. The amount of depreciation is computed as [(Cost-salvage) + useful life). Specifically. ($82,000-$12,000) +
7- $10,000.
8. Pald $148,000 to purchase manufacturing equipment.
9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, Year 2. It has a $29,000
salvage value and a seven-year life. The amount of depreciation is computed as [(Cost-salvage) + useful life]. Specifically.
($148,000-$29,000)+7=$17,000.
10. Pald $51,000 for rent and utility costs on the manufacturing facility.
11. Paid $71,000 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 $242,000 from work in process Inventory to finished goods.
13. Sold 870 eBook readers for $426,000.
14. It cost Antioch $156,600 to make the eBook readers sold in Event 13.
Required:
a. Use a horizontal financial statements model to show how each event affects the balance sheet, Income statement, and statement of
cash flows. More specifically, record the amounts of the events into the model. Also, In the Statement of Cash Flows column, classify
the cash flows as operating activities (OA), Investing activities (IA), or financing activities (FA). The first event is recorded as an example.
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.
d. Distinguish between the product costs and the upstream costs that Antioch incurred.
Event
Number
Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the
cash flows as operating activities (OA), Investing activities (IA), or financing activities (FA). The first event is recorded as an example.
Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank noinput is needed.
Beginning
balance
1
2
3
4
5
6
7.
8
9
10
11
12
13.
Total
C1
Cach
677,000+
1.1
1.1
1+1
1+1
1.1
1.A
1*1
1+1
...
1.1
+1
1+1
65,000+
1+1
1.1
•
|-
.
C3
.
Workin
Process
Inventory
30,000+
1+1
1.
1+1
1.1
Finished
Goods
Balance Sheet
50,000+
+
ANTIOCH COMPANY
Horizontal Financial Statements Model
Book V
Office
Futur
Book Value
Manufacturing
Equipment
tockholdersuty
Common Retained
Book Eaming
591,000+
231.000
1.1
Revu
Income ment
Expenses Net Income
tement of Cash
Flow
Show less
Transcribed Image Text:Antioch Company makes eBook readers. The company had the following amounts at the beginning of Year 2: Cash, $677,000, Raw Materials Inventory, $65,000; Work In Process Inventory, $30,000; Finished Goods Inventory, $50,000; Common Stock, $591,000; and Retained Earnings. $231,000. Antioch experienced the following accounting events during Year 2. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions. 1. Pald $28,000 of research and development costs. 2. Paid $52,000 for raw materials that will be used to make eBook readers. 3. Placed $91,000 of the raw materials cost into the process of manufacturing eBook readers. 4. Pald $73,000 for salaries of selling and administrative employees. 5. Pald $94,000 for wages of production workers. 6. Pald $82,000 to purchase equipment used in selling and administrative offices. 7. Recognized depreciation on the office equipment. The equipment was acquired on January 1, Year 2. It has a $12,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost-salvage) + useful life). Specifically. ($82,000-$12,000) + 7- $10,000. 8. Pald $148,000 to purchase manufacturing equipment. 9. Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, Year 2. It has a $29,000 salvage value and a seven-year life. The amount of depreciation is computed as [(Cost-salvage) + useful life]. Specifically. ($148,000-$29,000)+7=$17,000. 10. Pald $51,000 for rent and utility costs on the manufacturing facility. 11. Paid $71,000 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 $242,000 from work in process Inventory to finished goods. 13. Sold 870 eBook readers for $426,000. 14. It cost Antioch $156,600 to make the eBook readers sold in Event 13. Required: a. Use a horizontal financial statements model to show how each event affects the balance sheet, Income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, In the Statement of Cash Flows column, classify the cash flows as operating activities (OA), Investing activities (IA), or financing activities (FA). The first event is recorded as an example. 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. d. Distinguish between the product costs and the upstream costs that Antioch incurred. Event Number Use a horizontal financial statements model to show how each event affects the balance sheet, income statement, and statement of cash flows. More specifically, record the amounts of the events into the model. Also, in the Statement of Cash Flows column, classify the cash flows as operating activities (OA), Investing activities (IA), or financing activities (FA). The first event is recorded as an example. Note: Enter any decreases to account balances and cash outflows with a minus sign. Leave cells blank noinput is needed. Beginning balance 1 2 3 4 5 6 7. 8 9 10 11 12 13. Total C1 Cach 677,000+ 1.1 1.1 1+1 1+1 1.1 1.A 1*1 1+1 ... 1.1 +1 1+1 65,000+ 1+1 1.1 • |- . C3 . Workin Process Inventory 30,000+ 1+1 1. 1+1 1.1 Finished Goods Balance Sheet 50,000+ + ANTIOCH COMPANY Horizontal Financial Statements Model Book V Office Futur Book Value Manufacturing Equipment tockholdersuty Common Retained Book Eaming 591,000+ 231.000 1.1 Revu Income ment Expenses Net Income tement of Cash Flow Show less
Expert Solution
steps

Step by step

Solved in 6 steps with 4 images

Blurred answer
Knowledge Booster
Completing the Accounting Cycle
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education