Antioch Company makes eBook readers. The company had the following amounts at th

Question

Antioch Company makes eBook readers. The company had the following amounts at the beginning of 2018: Cash, $664,000; Raw Materials Inventory, $69,000; Work in Process Inventory, $22,000; Finished Goods Inventory, $54,000; Common Stock, $594,000; and Retained Earnings, $215,000. Antioch experienced the following accounting events during 2018. Other than the adjusting entries for depreciation, assume that all transactions are cash transactions.

Paid $28,000 of research and development costs.

Paid $66,000 for raw materials that will be used to make eBook readers.

Placed $90,000 of the raw materials cost into the process of manufacturing eBook readers.

Paid $64,000 for salaries of selling and administrative employees.

Paid $111,000 for wages of production workers.

Paid $75,000 to purchase equipment used in selling and administrative offices.

Recognized depreciation on the office equipment. The equipment was acquired on January 1, 2018. It has a $15,000 salvage value and a six-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($75,000 – $15,000) ÷ 6 = $10,000.

Paid $185,000 to purchase manufacturing equipment.

Recognized depreciation on the manufacturing equipment. The equipment was acquired on January 1, 2018. It has a $23,000 salvage value and a nine-year life. The amount of depreciation is computed as [(Cost – salvage) ÷ useful life]. Specifically, ($185,000 – $23,000) ÷ 9 = $18,000.

Paid $57,000 for rent and utility costs on the manufacturing facility.

Paid $73,000 for inventory holding expenses for completed eBook readers (rental of warehouse space, salaries of warehouse personnel, and other general storage cost).

Completed and transferred eBook readers that had total cost of $260,000 from work in process inventory to finished goods.

Sold 900 eBook readers for $424,000.

It cost Antioch $162,000 to make the eBook readers sold in Event 13.

ANTIOCH COMPANY Financial Statements Model Assets - Stockholders' Equity Income Statement Event Statement of Cash Flow Work in Office Furniture RetainedRevenue Earnings Finished + ManufacturingCommon Equipment No. Cash + ExpenseNet Income Materials Process Stock 664,000 + 69,000+ 22,000 + 54,000 594,000 215,000 Total

Explanation / Answer

Financial Statement Assets Stock holders's equity Income statement Statement of Cash Cash Raw Materials Work in progress Finished Goods Office Furnitures Manufacturing Equipment Common stock Retained Earnings Revenue Expense Net Income 664000 69000 22000 54000 549000 215000 -28000 260000 28000 -71000 -66000 66000 -314000 -64000 90000 64000 -111000 -225000 -22000 111000 -75000 75000 -10000 10000 -185000 185000 -18000 18000 -57000 57000 -73000 73000 424000 162000 -71000 5000 0 0 0 0 260000 549000 144000 424000 495000 -71000 0

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