Baird Manufacturing Company was started on January 1, 2018, when it acquired $81

Question

Baird Manufacturing Company was started on January 1, 2018, when it acquired $81,000 cash by issuing common stock. Baird immediately purchased office furniture and manufacturing equipment costing $9,800 and $24,900, respectively. The office furniture had an 8-year useful life and a zero salvage value. The manufacturing equipment had a $3,300 salvage value and an expected useful life of three years. The company paid $11,500 for salaries of administrative personnel and $15,800 for wages to production personnel. Finally, the company paid $16,360 for raw materials that were used to make inventory. All inventory was started and completed during the year. Baird completed production on 4,800 units of product and sold 3,880 units at a price of $15 each in 2018. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.) Required Determine the total product cost and the average cost per unit of the inventory produced in 2018. (Round "Average cost per unit" to 2 decimal places.) Determine the amount of cost of goods sold that would appear on the 2018 income statement. (Do not round intermediate calculations.) Determine the amount of the ending inventory balance that would appear on the December 31, 2018, balance sheet. (Do not round intermediate calculations.) Determine the amount of net income that would appear on the 2018 income statement. Determine the amount of retained earnings that would appear on the December 31, 2018, balance sheet. Determine the amount of total assets that would appear on the December 31, 2018, balance sheet. a. total product cost? average cost per unit? b. cost of good sold? c. ending inventory? d. net income? e. retained earning? f. total asset?

Explanation / Answer

Total Product cost Average cost per unit Raw Materials 16360 3.41 Wages 15800 3.29 Total Direct costs 32160 6.7 Add : Manufacturing Overhead Depreciation on manufacturing equipment 7200 1.5 =(24900-3300)/3 years Requirement a Total Product Cost & Average cost per unit 39360 8.2 Requirement b Cost of goods sold 31816 =33960/4800*3880 Requirement c Less : Ending Inventory of finished goods 7544 =39360/4800*(4800-3880) Requirement d Net Income would be as follows Sales 58200 Cost of goods sold 31816 Gross Margin 26384 Less : Administrative expenses Salary of administrative personnel 11500 Depreciation on office furniture 1225 =(9800/8 years) Net Income 13659 Requirement e Since this is the first year of the company, the amount of retained earnings would be equal to their net income i.e. 13659 Requirement f Total asset would consist of following Cash 60840 Inventory 7544 Fixed asset Manufacturing equipment 17700 Office furniture 8575 Total assets 94659

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