Sample Company AIncome StatementFor the Year Ended December 31, 2018SalesFinished goods inventory, January 1, 2018Cost of goods manufacturedCost of finished goods available for saleFinished goods inventory, December 31, 2018 (400)Cost of goods soldGross profitOperating expenses:Selling expensesAdministrative expensesTotal operating expensesNet incomeIncome Statement BSample Company BIncome StatementFor the Year Ended December 31, 2018Sales$42,000Beginning inventoryNet purchasesInventory available for sale $11,650Ending inventory(400)Cost of goods soldGross profitOperating expenses:Selling expensesAdministrative expensesTotal operating expensesNet incomeBalance Sheet CCashAccounts receivable (net)InventorySuppliesLandTotal assets$5,2506,400Accounts payable$6,4005,250Sample Company CBalance SheetDecember 31, 2018AssetsLiabilities(11,250)$30,750(11,650)$19,100$5,2506,400$11,650Stockholders' EquityCommon stockRetained earningsTotal stockholders' equityTotal liabilities and stockholders' equityBalance Sheet D$6,4005,250$20,80010,0006,0002,10017,000$55,900$17,800$19,00019,10038,100$55,900$42,000(11,250)$30,750(11,650)$19,100 Mastery Problem: Introduction to Managerial AccountingAble Baker Charlie CompanyCharles Maxwell is starting a cheesecake bakery, Able Baker Charlie Company, to produce and sell different flavored cheesecakes to restaurants and the general public. He has just begun his study of accounting, and is a bit confused aboutthe many types of reports he has read about and how they will help him run his business. He asks you to help him clarify what the differences between managerial accounting and financial accounting are. He's also wondering how to set uphis inventory, how to classify the costs of his business, and how to fill in some missing information.Managerial vs. FinancialSelect whether the following characteristics are most often associated with managerial accounting or financial accounting.Primarily used for internal decision makingGenerally Accepted Accounting Principles (GAAP) must be usedPrepared statements usually pertain to the company as a whole rather than individual departments or productsInformation provided will often be subjective, such as estimated future resultsOften prepared on an as-needed basis rather than at fixed intervalsCost ClassificationCharles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake.(Select "Yes" or "No" from the below dropdowns.)ProductCostPeriodCostCostEggs used tomakecheesecakesBaker'swagesDeliverydriver wagesDepreciationof officecomputersPower to runcheesecakeovensPresident'ssalarySalescommissionsFactorysupervisorsalaryDirectMaterialsDirectLaborFactoryOverheadSellingExpenseAdministrativeExpenseDirectCostIndirectCostPrimeCostConversionCostFinancial StatementsCharles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets CandD. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company.Income Statement A

Prime Cost=Direct Materials+Direct LaborConversion Cost=Direct Labor+Factory Overhead

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake. (Select "Yes" or "No" from the below dropdowns.) Product Cost Period Cost Cost Eggs used to Delivery Depreciation of office camputers ovens President's salary salary Direct Materials Direct Labor Factory Overhead Selling Expense Administrative Expense Direct Cost Indirect Cost Prime Cost Conversion Cost Financial Statements Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets Cand D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company Income Statement A

Charles has provided some of the costs he expects to incur as follows. Decide on the classifications that could be applied to each of these costs using the table provided. The cost object in each case is the cheesecake. (Select "Yes" or "No" from the below dropdowns.) Product Cost Period Cost Cost Eggs used to Delivery Depreciation of office camputers ovens President's salary salary Direct Materials Direct Labor Factory Overhead Selling Expense Administrative Expense Direct Cost Indirect Cost Prime Cost Conversion Cost Financial Statements Charles found some sample income statements and balance sheets on the Internet, and asked which of them might be most appropriate for a manufacturing business like his. Review income statements A and B, and balance sheets Cand D. Determine which income statement and balance sheet would be most appropriate for a manufacturing business like Able Baker Charlie Company Income Statement A

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter6: Cash And Internal Control

Section: Chapter Questions

Problem 6.5AMCP

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