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Hoehn Manufacturing Company

Hoehn Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions.

1. Acquired $50,000 cash by issuing common stock.
2. Paid $8,000 for the materials used to make its products, all of which were started and completed during the year.
3. Paid salaries of $4,400 to selling and administrative employees.
4. Paid wages of $7,000 to production workers.
5. Paid $9,600 for furniture used in selling and administrative offices. The furniture was acquired on January 1. It had a $1,600 estimated salvage value and a four-year useful life.
6. Paid $13,000 for manufacturing equipment. The equipment was acquired on January 1. It had a $1,000 estimated salvage value and a three-year useful life.
7. Sold inventory to customers for $25,000 that had cost $14,000 to make.

Required:
Show how these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example. (Leave no cells blank - be certain to enter "0" wherever required. Amounts to be deducted should be indicated by a minus sign. Omit the "$" sign in your response.)

Financial Statements Model
Assets Equity Income Statement
________________________________________ ________________________________________ ________________________________________
Event Manuf. Office Com. Ret.
No. Cash + Inventory + Equip.* + Furn.* = Stk. + Ear. Rev. - Exp. = Net Inc.
1. 50,000 + 0 + 0 + 0 = 50,000 + 0 0 - 0 = 0
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________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________ ________________________________________
Total
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________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________
________________________________________

*Record accumulated depreciation as negative amounts in these columns.

Solution Summary

The solution discusses the Hoehn Manufacturing Company balance sheet and income statement.

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