ABC Company started year 1 with $165,000 in its cash and common stock accounts,
ID: 2653387 • Letter: A
Question
ABC Company started year 1 with $165,000 in its cash and common stock accounts, During year 1, ABC paid $123,750 cash for employee compensation and $37.950 cash for materials. Required: a. Determine the total amount of assets and the amount of expense shown on the year I financial statements assuming ABC used the labor and materials to make 1.500 chairs. Further, assume that ABC sold 1,200 of the chairs it made. State the name(s) of the expense account(s) shown on the income statement. b. Determine the total amount of assets and the amount of expense shown on the year I financial statements assuming ABC used the labor and materials to provide dental cleaning services to 500 patients. State the name(s) of the expense account(s) shown on the income statement.Explanation / Answer
Cash at the beginning 165000 Cash paid to employees 123750 Material purchased 37950 Cash at the End 3300 Total cost of Chair =$123,750 + $37950 $161,700.00 No. of chairs 1500 Cost per Chair $107.80 No. of chairs sold 1200 Sales = $107.80 x 1200 chairs $129,360.00 Inventory (1500 -1200 chairs)x$107.80 $32,340.00 Total Assets = cash + Inventory $35,640.00 Total Expenss = Labour + material $161,700.00 Name of the Expense Cost of good sold b. Cash at the beginning 165000 Cash paid to employees 123750 Material purchased 37950 Cash at the End 3300 Dental cleaning per patient $323.40 Total Assets = cash $3,300.00 Total Expenss = Labour + material $161,700.00 Name of the Expense Cost of Service