Thornton Manufacturing Company was started on January 1, year 1, when it acquired $89,000 cash by issuing common stock. Thornton immediately purchased office furniture and manufacturing equipment costing $9,100 and $32,600, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,800 salvage value and an expected useful life of four years. The company paid $11,200 for salaries of administrative personnel and $15,900 for wages to production personnel. Finally, the company paid $10,500 for raw materials that were used to make inventory. All inventory was started and completed during the year. Thornton completed production on 4,200 units of product and sold 3,290 units at a price of $15 each in year 1. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.) Requireda. Determine the total product cost and the average cost per unit of the inventory produced in year 1.Note: Round "Average cost per unit" to 2 decimal places.b. Determine the amount of cost of goods sold that would appear on the year 1 income statement.Note: Do not round intermediate calculations.c. Determine the amount of the ending inventory balance that would appear on the December 31, year 1, balance sheet.Note: Do not round intermediate calculations.d. Determine the amount of net income that would appear on the year 1 income statement.Note: Do not round intermediate calculations.e. Determine the amount of retained earnings that would appear on the December 31, year 1, balance sheet.Note: Do not round intermediate calculations.f. Determine the amount of total assets that would appear on the December 31, year 1, balance sheet.Note: Do not round intermediate calculations.a. Total product costa. Average cost per unitb. Cost of good soldc. Ending inventoryd. Net incomee. Retained earningsf. Total assets

Working note: Calculation of depreciation on manufacturing equipment: Depreciation = (cost - salvage…

Answered: Thornton Manufacturing Company was…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Thornton Manufacturing Company was started on January 1, year 1, when it acquired $89,000 cash by issuing common stock. Thornton immediately purchased office furniture and manufacturing equipment costing $9,100 and $32,600, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $3,800 salvage value and an expected useful life of four years. The company paid $11,200 for salaries of administrative personnel and $15,900 for wages to production personnel. Finally, the company paid $10,500 for raw materials that were used to make inventory. All inventory was started and completed during the year. Thornton completed production on 4,200 units of product and sold 3,290 units at a price of $15 each in year 1. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.)

Required
a. Determine the total product cost and the average cost per unit of the inventory produced in year 1.
Note: Round "Average cost per unit" to 2 decimal places.
b. Determine the amount of cost of goods sold that would appear on the year 1 income statement.
Note: Do not round intermediate calculations.
c. Determine the amount of the ending inventory balance that would appear on the December 31, year 1, balance sheet.
Note: Do not round intermediate calculations.
d. Determine the amount of net income that would appear on the year 1 income statement.
Note: Do not round intermediate calculations.
e. Determine the amount of retained earnings that would appear on the December 31, year 1, balance sheet.
Note: Do not round intermediate calculations.
f. Determine the amount of total assets that would appear on the December 31, year 1, balance sheet.
Note: Do not round intermediate calculations.
a. Total product cost
a. Average cost per unit
b. Cost of good sold
c. Ending inventory
d. Net income
e. Retained earnings
f. Total assets

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