Thornton Modems, Incorporated, makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. 1. Acquired $910,000 of cash from the owners. 2. Purchased $350,000 of manufacturing equipment. The equipment has a $46,000 salvage value and a four-year useful life. 3. The company started and completed 6,600 modems. Direct materials purchased and used amounted to $56 per unit. 4. Direct labor costs amounted to $41 per unit. 5. The cost of manufacturing supplies amounted to $20 per unit. 6. The company paid $66,000 to rent the manufacturing facility. 7. Thornton sold all 6,600 units at a cash price of $200 per unit. (Hint: It will be necessary to determine the manufacturing costs in order to record the cost of goods sold.) 8. The sales staff was paid a $14.00 per unit sales commission. 9. Paid $55,000 to purchase equipment for administrative offices. The equipment was expected to have a $4,600 salvage value and a three-year useful life. 10. Administrative expenses consisting of office rental and salaries amounted to $79,950. Required a. Record the transaction data for Thornton Modems, Incorporated, in the financial statements. The first transaction is recorded as an example b-1. Prepare an income statement. b-2. Prepare a balance sheet.
Thornton Modems, Incorporated, makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. 1. Acquired $910,000 of cash from the owners. 2. Purchased $350,000 of manufacturing equipment. The equipment has a $46,000 salvage value and a four-year useful life. 3. The company started and completed 6,600 modems. Direct materials purchased and used amounted to $56 per unit. 4. Direct labor costs amounted to $41 per unit. 5. The cost of manufacturing supplies amounted to $20 per unit. 6. The company paid $66,000 to rent the manufacturing facility. 7. Thornton sold all 6,600 units at a cash price of $200 per unit. (Hint: It will be necessary to determine the manufacturing costs in order to record the cost of goods sold.) 8. The sales staff was paid a $14.00 per unit sales commission. 9. Paid $55,000 to purchase equipment for administrative offices. The equipment was expected to have a $4,600 salvage value and a three-year useful life. 10. Administrative expenses consisting of office rental and salaries amounted to $79,950. Required a. Record the transaction data for Thornton Modems, Incorporated, in the financial statements. The first transaction is recorded as an example b-1. Prepare an income statement. b-2. Prepare a balance sheet.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Thornton Modems, Incorporated, makes modem cards that are used in notebook computers. The company completed the following
transactions during year 1. All purchases and sales were made with cash.
1. Acquired $910,000 of cash from the owners.
2. Purchased $350,000 of manufacturing equipment. The equipment has a $46,000 salvage value and a four-year useful life.
3. The company started and completed 6,600 modems. Direct materials purchased and used amounted to $56 per unit.
4. Direct labor costs amounted to $41 per unit.
5. The cost of manufacturing supplies amounted to $20 per unit.
6. The company paid $66,000 to rent the manufacturing facility.
Thornton sold all 6,600 units at a cash price of $200 per unit. (Hint: It will be necessary to determine the manufacturing costs in
order to record the cost of goods sold.)
8. The sales staff was paid a $14.00 per unit sales commission.
9. Paid $55,000 to purchase equipment for administrative offices. The equipment was expected to have a $4,600 salvage value and
a three-year useful life.
10. Administrative expenses consisting of office rental and salaries amounted to $79,950.
Required
a. Record the transaction data for Thornton Modems, Incorporated, in the financial statements. The first transaction is recorded as an
example
b-1. Prepare an income statement.
b-2. Prepare a balance sheet.
Complete this question by entering your answers in the tabs below.
Req A
Event
Number
Record the transaction data for Thornton Modems, Incorporated, in the financial statements. The first transaction is recorded as an example.
Note: Enter decreases to account balances with a minus sign. Do not round Intermediate calculations.
1.
2a.
2b.
3.
Req B1
5.
6.
7a.
7b.
8.
9a.
9b.
10.
Total
Cash
910,000+
+
+
+
+
+
+
+
+
Reg B2
910,000+
Inventory
+
+
+
+
+
+
Assets
↓
↓
↓
0 +
THORNTON MODEMS, INCORPORATED
Balance Sheet
Book Value
Manufacturing
Equipment
+
+
+
+
+
+
+
+
+
+
+
+
+
+
0 +
Book Value
Office
Equipment
=
=
=
0 =
Stockholders' Equity
Common
Stock
910,000+
< Req A
+
+
+
+
+
+
+
+
+
+
+
T
+
+
0 +
Retained
Earnings
0
Revenue
Req B1 >
Income Statement
0-
Expense - Net Income
=
=
=
0 =
0
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