Question - ABC Company started year 1 with $225,000 in its cash and common stock accounts. During year 1, ABC paid $168,750 cash for employee compensation and $51,750 cash for materials.
Required:
a. Determine the total amount of assets and the amount of expense shown on the year 1 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 1 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.