Question

The following transactions pertain to 2018, the first-year operations of Benson Company. All inventory was started and completed during 2018. Assume that all transactions are cash transactions.

1. Acquired $4,100 cash by issuing common stock.

2. Paid $690 for materials used to produce inventory.

3. Paid $1,810 to production workers.

4. Paid $1,829 rental fee for production equipment.

5. Paid $130 to administrative employees.

6. Paid $115 rental fee for administrative office equipment.

7. Produced 390 units of inventory of which 270 units were sold at a price of $13 each.

Required

Prepare an income statement and a balance sheet in accordance with GAAP.

BENSON COMPANY
Income Statement for 2018
not attempted	not attempted
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not attempted	$0
not attempted	not attempted
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not attempted	$0

BENSON COMPANY
Balance Sheet as of 12/31/2018
Assets
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not attempted	not attempted
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Total assets	$0
Equity
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not attempted	not attempted
not attempted	not attempted
Total equity	$0

Answer 1

Answer:

Income statement for the yr ended 2018

Sales revenue (270*13)	$3510
Less: COGS;
Material used ($690×270/390) $ 477.69
Production Wages($1810 ×270/390) 1253.08
Manufacturing OH ($1829×270/390)    1266.23	2997
Gross Profit	$ 513
Less: Operating costs:
Administration Exp. (130+115)	245
Operating income or Net income	$ 268

  

Balance sheet as on Dec. 31,2018

Assets:
Current assets:
Cash (4100-690-1810-1829-130-115+3510)	$ 3036
Inventory ($2997*120/270)	1332
Total current assets	$ 4368
Non-current assets	0
Total assets	$ 4368
Liabilities & Equity:
Current liabilities	$ 0
Non-current liabilities	0
Total liabilities	$ 0
Stockholders' equity:
Common stock	$ 4100
Retained Earnings	268
Total liabilities & stockholders' equity	$ 4368