The following transactions pertain to 2015, the first-year operations of Bailey

Question

The following transactions pertain to 2015, the first-year operations of Bailey Company. All inventory was started and completed during 2015. Assume that all transactions are cash transactions. . Acquired $7,000 cash by issuing common stock 2. Paid $2,800 for materials used to produce inventory. 3. Paid $1,900 to production workers. 4. Paid $1,300 rental fee for production equipment. 5. Paid $350 to administrative employees. 6. Paid $400 rental fee for administrative office equipment. 7. Produced 500 units of inventory of which 450 units were sold at a price of $17.50 each Required a-1. Prepare an income statement Answer is complete but not entirely correct. BAILEY COMPANY Income Statement for 2015 Sales revenue Cost of goods sold Gross margin Administrative expense S 7,875 1,725 600 3 (750) Net income $ 1,725

Explanation / Answer

BAILEY COMPANY Income Statement for 2015 Sales revenue $7,875 Cost of Goods Sold $5,400 Gross margin $2,475 Administrative expense ($750) Net Income $1,725 BAILEY COMPANY Statement of Cash Flows For the Year Ended December 31 Cash flow from operating activities     Income from revenue $7,875     Outflow for inventory ($2,800)     Outflow for manufacturing expense ($2,900)     Outflow for administrative expenses ($750) Net outflow from operating activities $1,425 Cash flow from investing activities $0 Cash flow from financing activities $7,000 Net change in cash $8,425 Plus: Beginning cash balance $0 Ending cash balance $8,425

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