Zachary Modems, Inc. acquired a subsidiary named Anywhere, Inc. (AI). AI manufac
ID: 2581027 • Letter: Z
Question
Zachary Modems, Inc. acquired a subsidiary named Anywhere, Inc. (AI). AI manufactures a wireless modem that enables users to access the Internet through cell phones. The following trial balance was drawn from the accounts of the subsidiary:
The subsidiary completed the following transactions during 2017:
1. Paid $55,380 cash for direct raw materials.
2. Transferred $46,160 of direct raw materials to work in process.
3. Paid production employees $73,860 cash.
4. Applied $48,910 of manufacturing overhead costs to work in process.
5. Completed work on products that cost $150,410.
6. Sold products that cost $131,950 for $167,950 cash. Record the recognition of revenue in a row labeled 6a and the cost of goods sold in a row labeled 6b.
7. Paid $18,450 cash for selling and administrative expenses.
8. Actual overhead costs paid in cash amounted to $50,710.
9. Closed the Manufacturing Overhead account. The amount of over- or underapplied overhead was insignificant (immaterial).
10. Made a $4,580 cash distribution to the owners.
REQUIRED
A. For Anywhere, Inc., record the events in a horizontal statements model. The first event is shown as an example.
Cash $ 184,600 Raw materials inventory 3,680 Work in process inventory 5,530 Finished goods inventory 6,450 Common stock $ 119,060 Retained earnings 81,200 Totals $ 200,260 $ 200,260Explanation / Answer
The Events for Zachary Modems, Inc. in horizontal statements model is as below
Note :- All the given transactions are placed in required place.
Hence,
The total Assets = $338,690
& the total Equity = $338,690
Net Income = Revenue - Expenses = $167,950 - $147,690 = $20,260
So,
BALANCE SHEET INCOME STATEMENT ASSETS = EQUITY Revenue - Expense = Net Income Event No Cash + Manufacturing Overhead + Raw Materials + Work in process + Finshed Goods = Common Stock + Retained Earnings Beg. Bal $184,600 + + $3,680 + $5,530 + $6,450 = $119,060 + $81,200 - $55,380 = -$55,380 1 -$55,380 + + $55,380 + + = $55,380 + -$55,380 - = 2 + + -$46,160 + $46,160 + = + - = 3 -$73,860 + + + + = + -$73,860 - $73,860 = -$73,860 4 + + + $48,910 + = $48,910 + - = 5 + + + + $150,410 = $150,410 + - = 6a + + + + = + $167,950 - = $167,950 6b $167,950 + + + + -$131,950 = -$131,950 + $167,950 - = 7 -$18,450 + + + + = + -$18,450 - $18,450 = -$18,450 8 -$50,710 + $50,710 + + + = $50,710 + -$50,710 - = 9 + + + + = + - = 10 -$4,580 + + + + = + -$4,580 - = Total $149,570 + $50,710 + $12,900 + $100,600 + $24,910 = $292,520 + $46,170 $167,950 - $147,690 = $20,260Related Questions
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