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Magnificent Modems, Incorporated acquired a subsidiary named Anywhere, Incorporated (Al). Al manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary. Balance Sheet as of January 1, Year 2 Assets Cash Raw materials inventory Work in process inventory Finished goods inventory Total Assets Stockholders' Equity $ 200,000 4,000 6,000 7,000 $ 217,000 Common stock Retained earnings Total Stockholders' Equity The subsidiary completed the following transactions during Year 2. $ 129,000 88,000 $ 217,000

Magnificent Modems, Incorporated acquired a subsidiary named Anywhere, Incorporated (Al). Al manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary. Balance Sheet as of January 1, Year 2 Assets Cash Raw materials inventory Work in process inventory Finished goods inventory Total Assets Stockholders' Equity $ 200,000 4,000 6,000 7,000 $ 217,000 Common stock Retained earnings Total Stockholders' Equity The subsidiary completed the following transactions during Year 2. $ 129,000 88,000 $ 217,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Magnificent Modems, Incorporated acquired a subsidiary named Anywhere, Incorporated (Al). Al manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary. Balance Sheet as of January 1, Year 201 Assets Cash Raw materials inventory Work in process inventory Finished goods inventory Total Assets Stockholders' Equity $ 200,000 4,000 6,000 7,000 $ 217,000 Common stock Retained earnings Total Stockholders' Equity The subsidiary completed the following transactions during Year 2. 1. Paid $60,000 cash for direct raw materials. 2. Transferred $50,000 of direct raw materials to work in process. $ 129,000 88,000 $ 217,000 3. Paid production employees $80,000 cash. 4. Applied $53,000 of manufacturing overhead costs to work in process. 5. Completed work on products that cost $163,000. 6. Sold products that cost $143,000 for $182,000 cash. 7. Paid $20,000 cash for selling and administrative expenses. 8. Actual overhead costs paid in cash amounted to $55,000. 9. Closed the Manufacturing Overhead account. The amount of over- or underapplied overhead was insignificant (immaterial). 10. Made a $5,000 cash distribution to the owners. Required a. For Anywhere, Incorporated, record the events in a financial statements model. The beginning balances are shown as an example. b. Prepare a schedule of cost of goods manufactured and sold. c-1. Prepare an income statement. c-2. Prepare a balance sheet.
Transcribed Image Text:Magnificent Modems, Incorporated acquired a subsidiary named Anywhere, Incorporated (Al). Al manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary. Balance Sheet as of January 1, Year 201 Assets Cash Raw materials inventory Work in process inventory Finished goods inventory Total Assets Stockholders' Equity $ 200,000 4,000 6,000 7,000 $ 217,000 Common stock Retained earnings Total Stockholders' Equity The subsidiary completed the following transactions during Year 2. 1. Paid $60,000 cash for direct raw materials. 2. Transferred $50,000 of direct raw materials to work in process. $ 129,000 88,000 $ 217,000 3. Paid production employees $80,000 cash. 4. Applied $53,000 of manufacturing overhead costs to work in process. 5. Completed work on products that cost $163,000. 6. Sold products that cost $143,000 for $182,000 cash. 7. Paid $20,000 cash for selling and administrative expenses. 8. Actual overhead costs paid in cash amounted to $55,000. 9. Closed the Manufacturing Overhead account. The amount of over- or underapplied overhead was insignificant (immaterial). 10. Made a $5,000 cash distribution to the owners. Required a. For Anywhere, Incorporated, record the events in a financial statements model. The beginning balances are shown as an example. b. Prepare a schedule of cost of goods manufactured and sold. c-1. Prepare an income statement. c-2. Prepare a balance sheet.
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