Slattery Company was formed on January 1, 2013, to build a single product. The c

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 $260,000 cash. The product costs $16 to make, all of which is paid in cash at the time of production. Slattery sells each unit of the product for $32 on credit and incurs sales commissions per unit of $5 cash. In 2013, Slattery produced 8,000 units, shipped 6,000 units, and received payment for 5,000 units.

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

1a.

1c.

There is no difference in Balance sheet figures in 1a and1c.

Income statement under revenue recognition at the completion of the earnings process. Revenue: Sales of unit produced 192000 Total' 192000 Cost : Cost of goods sold 128000 Sales Commission 30000 Total 158000 Net Profit 34000

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