Answer:
Explanation:
The preparation is shown below:
Gibson Company
Income statement
For the year 2018
Particulars Amount
Sales (360 units × $25) $9,000
Less: Cost of goods sold -$7,200
Gross profit $1,800
Less: rental fee -$400
Less: administrative employees -$350
Net income $1,050
The computation of cost of goods sold would be
= Materials used to produce inventory + production workers + rental fee for production equipment
= $4,700 + $2,400 + $900
= $8,000
So, the cost of goods sold would be
= $8,000 × 360 units ÷ 400 units
= 7,200
And, the ending balance of finished goods inventory would be
= $8,000 - $7,200
= $800
Gibson Company
Balance sheet
For the year 2018
Liabilities Amount Liabilities Amount
Common stock $12,000 Cash $12,250
Add: Retained earning $1,050 Finished goods inventory $800
Total $13,050 Total $13,050
The cash balance would be
Cash flow from Operating activities
Sales $9,000
Less: cost of goods sold -$7,200
Less: admin expenses -$750
Less: Increase in inventory -$800
Net Cash flow from Operating activities -$250
Cash flow from Investing activities $0
Net Cash flow from Investing activities $0
Cash flow from Financing activities
Issuance of common stock $12,000
Net Cash flow from Financing activities $12,000
The computation of the cash balance
Net Cash flow from Operating activities $250
Net Cash flow from Investing activities $0
Net Cash flow from Financing activities $12,000
Cash balance $12,250
