Question

Problem:  Slattery Company was formed on January 1, 2013, to build a single product.  The company issued no-par

common stock on that date for $340,000 cash.  The product costs #14 to make, all of which is paid in cash at the time of production.  Slattery sells each unit of the product for $28 on credit and incurs sales commissions per unit of $6 cash.  In 2013, Slattery produced 15,000 units, shipped 12,000 units, and received payment for 11,000 units.

An income statement under revenue recognition at the completion of the earnings process shows:

Revenue            336,000

CGS                    168,000

Selling expense  72,000

 Net Income        96,000.  

I need to then prepare the balance sheet, and here’s where I’m stuck.

Cash                  ?

A/R                28,000

Inventory      42,000

TOTAL             ?

Com stock    340,000

Ret. earn          ?

 I also have to do both an income statement and balance sheet for revenue recognition PRIOR to the completion of the earnings process.  I don’t get it!

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