Issa Manufacturing Company was started on January 1, 2014, when it acquired $78,
ID: 2462919 • Letter: I
Question
Issa Manufacturing Company was started on January 1, 2014, when it acquired $78,000 cash by issuing common stock. Issa immediately purchased office furniture and manufacturing equipment costing $21,000 and $49,000, respectively. The office furniture had a seven-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of five years. The company paid $12,000 for salaries of administrative personnel and $21,000 for wages to production personnel. Finally, the company paid $26,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Issa completed production on 8,000 units of product and sold 7,200 units at a price of $15 each in 2014. (Assume that all transactions are cash transactions.)
Determine the total product cost and the average cost per unit of the inventory produced in 2014.
Determine the amount of cost of goods sold that would appear on the 2014 income statement.
Determine the amount of the ending inventory balance that would appear on the December 31, 2014, balance sheet.
Determine the amount of net income that would appear on the 2014 income statement.
Determine the amount of retained earnings that would appear on the December 31, 2014, balance sheet.
Determine the amount of total assets that would appear on the December 31, 2014, balance sheet.
Determine the amount of net cash flow from operating activities that would appear on the December 31, 2014 statement of cash flows. (List cash outflow as negative amount.)
Determine the amount of net cash flow from investing activities that would appear on the December 31, 2014 statement of cash flows. (List cash outflow as negative amount.)
Note! The one up is incorrect. Please correct and repost
Issa Manufacturing Company was started on January 1, 2014, when it acquired $78,000 cash by issuing common stock. Issa immediately purchased office furniture and manufacturing equipment costing $21,000 and $49,000, respectively. The office furniture had a seven-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of five years. The company paid $12,000 for salaries of administrative personnel and $21,000 for wages to production personnel. Finally, the company paid $26,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Issa completed production on 8,000 units of product and sold 7,200 units at a price of $15 each in 2014. (Assume that all transactions are cash transactions.)
a.Determine the total product cost and the average cost per unit of the inventory produced in 2014.
b.Determine the amount of cost of goods sold that would appear on the 2014 income statement.
c.Determine the amount of the ending inventory balance that would appear on the December 31, 2014, balance sheet.
d.Determine the amount of net income that would appear on the 2014 income statement.
e.Determine the amount of retained earnings that would appear on the December 31, 2014, balance sheet.
f.Determine the amount of total assets that would appear on the December 31, 2014, balance sheet.
g.Determine the amount of net cash flow from operating activities that would appear on the December 31, 2014 statement of cash flows. (List cash outflow as negative amount.)
h.Determine the amount of net cash flow from investing activities that would appear on the December 31, 2014 statement of cash flows. (List cash outflow as negative amount.)
Note! The one up is incorrect. Please correct and repost
Explanation / Answer
Issa Manufacturing Company Details Office furniture Manufacturing Equiment Purchase cost 21,000 49,000 Salvage - 4,000 Depreciable value 21,000 45,000 Useful life in years 7 5 Yearly Depreciation 3,000 9,000 Carrying value after 1st year 18,000 40,000 Cost of Prodcution Details Amt Raw materials used 26,000 Wages for production personnel 21,000 Equipment depreciation 9,000 Cost of Prodcution 56,000 Units produced 8,000 Unit cost of production $ 7.00 Units sold= 7200 units b cost of goods sold $ 50,400.00 Ending Inventory units 800 c Ending Inventory value = 5,600 d Net Income statement 2014 Sales revenue @$15= 108,000 Less Cost Of Goods Sold 50,400 Gross Profit 57,600 Operating expenses Admin salary 12,000 Office equipment depreciation 3,000 Total Operating Expense 15,000 Net Income 42,600 e Retained Earning 42,600 f Balance sheet as on Dec 31. (partial) Details Amt $ Assets Inventory 5,600 Office Equipment 18,000 Manufacturing Equipment 40,000 Cash = 57,000 Total Assets 120,600 g Cash flow from operating activities Net Income 42,600 Add back Depreciation 12,000 Less Increase in Inventory (5,600) Net Cash flow from operating activity 49,000 h Cash flow from Investing activities Purchase of Equipments (70,000) Net Cash flow from Investing activities
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