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28 Sep 2019
Effect of product versus period costs on financial statements HoenManufacturing Company experienced the following accounting eventsduring its first year of operation. With the exception of theadjusting entries for depreciation, all transactions are cashtransactions.
1. Acquired $ 50,000 cash by issuing common stock.
2. Paid $ 8,000 for the materials used to make products, all ofwhich were started and completed during the year.
3. Paid salaries of $ 4,400 to selling and administrativeemployees.
4. Paid wages of $ 7,000 to production workers.
5. Paid $ 9,600 for furniture used in selling and administrativeoffices. The furniture was acquired on January 1. It had a $ 1,600estimated salvage value and a four- year useful life.
6. Paid $ 13,000 for manufacturing equipment. The equipment wasacquired on January 1. It had a $ 1,000 estimated salvage value anda three- year useful life.
7. Sold inventory to customers for $ 25,000 that had cost $ 14,000to make.
Required Explain how these events would affect the balance sheet,income statement, and statement of cash flows by recording them ina horizontal financial statements model as indicated here. Thefirst event is recorded as an example. In the Cash Flow column,indicate whether the amounts represent financing activities ( FA),investing activities ( IA), or operating activities ( OA).
Effect of product versus period costs on financial statements HoenManufacturing Company experienced the following accounting eventsduring its first year of operation. With the exception of theadjusting entries for depreciation, all transactions are cashtransactions.
1. Acquired $ 50,000 cash by issuing common stock.
2. Paid $ 8,000 for the materials used to make products, all ofwhich were started and completed during the year.
3. Paid salaries of $ 4,400 to selling and administrativeemployees.
4. Paid wages of $ 7,000 to production workers.
5. Paid $ 9,600 for furniture used in selling and administrativeoffices. The furniture was acquired on January 1. It had a $ 1,600estimated salvage value and a four- year useful life.
6. Paid $ 13,000 for manufacturing equipment. The equipment wasacquired on January 1. It had a $ 1,000 estimated salvage value anda three- year useful life.
7. Sold inventory to customers for $ 25,000 that had cost $ 14,000to make.
Required Explain how these events would affect the balance sheet,income statement, and statement of cash flows by recording them ina horizontal financial statements model as indicated here. Thefirst event is recorded as an example. In the Cash Flow column,indicate whether the amounts represent financing activities ( FA),investing activities ( IA), or operating activities ( OA).
1. Acquired $ 50,000 cash by issuing common stock.
2. Paid $ 8,000 for the materials used to make products, all ofwhich were started and completed during the year.
3. Paid salaries of $ 4,400 to selling and administrativeemployees.
4. Paid wages of $ 7,000 to production workers.
5. Paid $ 9,600 for furniture used in selling and administrativeoffices. The furniture was acquired on January 1. It had a $ 1,600estimated salvage value and a four- year useful life.
6. Paid $ 13,000 for manufacturing equipment. The equipment wasacquired on January 1. It had a $ 1,000 estimated salvage value anda three- year useful life.
7. Sold inventory to customers for $ 25,000 that had cost $ 14,000to make.
Required Explain how these events would affect the balance sheet,income statement, and statement of cash flows by recording them ina horizontal financial statements model as indicated here. Thefirst event is recorded as an example. In the Cash Flow column,indicate whether the amounts represent financing activities ( FA),investing activities ( IA), or operating activities ( OA).
Tod ThielLv2
28 Sep 2019
