Discuss the differentiation between product versus general, selling, and administrative cost by setting up financial statements from the transactions.
The following transactions pertain to 2012, the first year of operations of Hall Company. All inventory was started and completed during 2012. Assume all transactions are cash transactions.
1. Acquired $4,000 cash by issuing common stock
2. Paid $720 for materials used to produce inventory.
3. Paid $1,800 to production workers
4. Paid $540 rental fee for production equipment
5. Paid $180 administrative employees.
6. Paid $144 rental fee for administrative office equipment
7. Produced 300 units of inventory of which 200 were sold at 12 each.
Required
Prepare an income statement, balance sheet, and statement of cash flows.