Slattery company was formed on January 1, 2013 to build a single product. the co

Question

Slattery company was formed on January 1, 2013 to build a single product. the company issued no par common stock on that date for $370,000 cash. The product cost $22 to make, all of which is paid in cash at the time of production. Slattery sells each unit of the product for $36 on credit and incurs sales commission per unit of $6 cash. In 2013, Slattery produced 17,000 units, shipped 14,000, and received payment for 11,000 units.

Required :

1a. prepare the 2013 income statement under revenue recognition at the completion of the earnings process

prepare the 2013 ending balance sheet under revenue recognition at the completion of the earnings process

1b. prepare the 2013 income statement under revenue recognition prior to the completion of the earnings process

prepare the 2013 ending balance sheet under revenue recognition prior to the completion of the earnings process

c. prepare the 2013 income statement under revenue recognition at the completion of the earnings process as cash is received

prepare the 2013 ending balance sheet under revenue recognition at the completion of the earnings process as cash is received

Explanation / Answer

1./C

INCOME STATEMENT UNDER REVENUE RECOGNISATION AT COMPITION OFEARNING PROCESS AS CASH RECEIVEED

REVENUE =$504000 (14000*$36)

COST OF GOODS SOLD=($308000) (14000*$22)

SELLING EXPENSES =($84000) (14000*$6)

NET INCOME =$112000

BALANCE SHEET UNDER REVENUE RECOGNISATION AT COMPITION OFEARNING PROCESS

CASH ($504000 +$370000 - $374000 - $102000) =$398000

PREPAID SELLING EXPENSES (3000* $6) =$18000

INVENTORY(3000 * $22) =$66000

TOTAL =$482000

COMMON STOCK AT PAR =$370000

RETAINED EARNINGS =$112000

TOTAL =$482000

NOTE; I AM UNABLE TO FIND OUT THE SOLUTION OF QUESTION 1B

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