Problem
Product versus selling, general, and administrative costs
Issa Manufacturing Company was started on January 1, 2014, when it acquired $78,000 cash by issuing common stock. Issa immediately purchased office furniture and manufacturing equipment costing $9,300 and $25,100, respectively. The office furniture had a seven-year useful life and a zero salvage value. The manufacturing equipment had a $3,800 salvage value and an expected useful life of three years. The company paid $11,200 for salaries of administrative personnel and $15,900 for wages to production personnel. Finally, the company paid $12,100 for raw materials that were used to make inventory. All inventory was started and completed during the year. Issa completed production on 4,500 units of product and sold 3,580 units at a price of $15 each in 2014. (Assume that all transactions are cash transactions.)
Required
a. Determine the total product cost and the average cost per unit of the inventory produced in 2014.
b. Determine the amount of cost of goods sold that would appear on the 2014 income statement.
c. Determine the amount of the ending inventory balance that would appear on the December 31, 2014, balance sheet.
d. Determine the amount of net income that would appear on the 2014 income statement.
e. Determine the amount of retained earnings that would appear on the December 31, 2014, balance sheet.
f. Determine the amount of total assets that would appear on the December 31, 2014, balance sheet.
g. Determine the amount of net cash flow from operating activities that would appear on the December 31, 2014 statement of cash flows. (List cash outflow as negative amount.)
h. Determine the amount of net cash flow from investing activities that would appear on the December 31, 2014 statement of cash flows. (List cash outflow as negative amount.)