Question

Bergamo Bay's computer system generated the following trial balance on December 31, 2017. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Payroll Payable) has not been recorded.

		Debit			Credit
Cash	$	66,000
Accounts receivable		41,000
Raw materials inventory		25,500
Work in process inventory		0
Finished goods inventory		9,000
Prepaid rent		3,000
Accounts payable				$	10,100
Notes payable					13,100
Common stock					30,000
Retained earnings					76,000
Sales					183,300
Cost of goods sold		105,000
Factory overhead		28,000
Operating expenses		35,000
Totals	$	312,500		$	312,500

After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.

Materials requisition 21-3010:		$	4,700	direct materials to Job 402
Materials requisition 21-3011:		$	7,000	direct materials to Job 404
Materials requisition 21-3012:		$	2,000	indirect materials
Labor time ticket 6052:		$	3,000	direct labor to Job 402
Labor time ticket 6053:		$	11,000	direct labor to Job 404
Labor time ticket 6054:		$	5,000	indirect labor

Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 100% of direct labor cost.

3. Prepare a revised trial balance.

Answer 1

3) Revised Trail Balance

	Debit	Credit
Cash	$   66,000.00
Accounts receivable	$   41,000.00
Raw materials inventory	$   11,800.00
Work in process inventory	$   39,700.00
Finished goods inventory	$      9,000.00
Prepaid rent	$      3,000.00
Accounts payable		$   10,100.00
Wages Payable		$   19,000.00
Notes payable		$   13,100.00
Common stock		$   30,000.00
Retained earnings		$   76,000.00
Sales		$ 183,300.00
Cost of goods sold	$ 126,000.00
Factory overhead
Operating expenses	$   35,000.00
Totals	$331,500.00	$331,500.00

Working Note-

1)

Raw Materials
Opening Balance	$ 25,500.00
direct materials to Job 402	$ (4,700.00)
direct materials to Job 404	$ (7,000.00)
indirect materials	$ (2,000.00)
Balance	$ 11,800.00

2)Work in Process Inventory

	Job 402	Job 404	Total
Direct Material	$    4,700.00	$    7,000.00	$ 11,700.00
Direct Labor	$    3,000.00	$ 11,000.00	$ 14,000.00
Overhead	$    3,000.00	$ 11,000.00	$ 14,000.00
Total	$ 10,700.00	$ 29,000.00	$ 39,700.00

3) Wages Payable = 14,000 + 5,000 = 19,000

4)Cost of goods sold = 105,000 +21,000* =126,000

*28000+2000+5000-14000=21000