XYZ Company had the below listed accounting events and transactions during opera
ID: 2512436 • Letter: X
Question
XYZ Company had the below listed accounting events and transactions during operations. Assume all transactions are cash transactions except of course which is noncash. 3) the depreciation expense Required: Using the Horizontal Analysis (included as attached) indicate how each of the amounts in these transactions would affect the balance sheet, income statement and cash flow statement. Transactions and Events: 1) Acquire $68,000 cash by issuing common stock 2) Pald $8,700 for inventory materials used to make the products all of which were started and completed during the yea 3) Paid salaries of $4,500 for Selling General & Administrative expenses (SG&A;) 4) Paid wages of production staff of $10,000 5) Paid $9,600 for furniture used in the home office by SG&A; staff. Acquired Jan 1 has a four year life and estimate salvage valude of $1,600 6) Paid $16,000 for manufacturing equipment. Acquired Jan 1 has a five year life and estimate salvage value of $1,000 7) Sold Products (Inventory) to customers for $35,000 that had a cost to manufacture of $14,000. 8) What is the ending Inventory Balance? 9) What is the ending Net Income? 10) What is the Operating Cash Flow given the above transactions as posted to you worksheet?Explanation / Answer
Ans. Working note: Cost of manufacturing that is include Cost of material and production cost like labour etc
Total cost of manufacturing is = 14000
Cost of labour/Wages paid of production = 10000
Material used for production (14000-10000) = 4000
8. Ending Balance of inventory is (8700-4000) = 4700
9. Calculation of Net income
Amt.
Sales $35000
Cost of manufacturing ($14000)
Salary for office and advt. exp ($4500)
Depreciation on equipment (16000-1000)/5 ($3000)
Depreciation on furniture (9600-1600)/4 ($2000)
Net Income 11500
10 Calculation of Cashflow from Operating Activities
Pariticulars $
Net income 11500
Add: Non cash exp. Depreication (2000+3000) 5000
Less: Current Assets and Liabilites Adjustment
Increase of Inventory (4700) (4700)
Cashflow from Operating Activities 11800
Furniture reported in Balance sheet is (9600-2000) = $7600
Equipment to be reported in Balance sheet (16000-3000) = $13000
Cashflow after adjusting Operating ,financial ,investment acitivites
Cash flow from Operating Activities 11800
Cashflow from Financial activities 68000
Cashflow from Investment activities(9600+16000) (25600)
Net cashflow to be reported in Balance sheet 54200
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