Question

QUESTION: PREPARE STATEMENT OF RETAINED EARNINGS (#7 under 'required' section only)

STUDY PROBLEM 9-3 Product- A DIRECT MATERIALS -QUANTITY PER UNIT 10 UNIT COST $25.00 TOTAL UNIT MATERIAL COST $250.00 PRODUCT LABOR HOURS PER UNIT 20 LABOR RATE PER HOUR $20.00 TOTAL UNIT LABOR COST s 400.00 APPLIED MANUFACTURING OVERHEAD UNIT COST $50.00 TOTAL PRODUCT COST 6700.00 QUANTITY TO BE PRODUCED 10,000 $ 2,100.00 SELLING PRICE - THREE TIMES UNIT COST MANUFACTURING OVERHEAD COST: DEPRECIATION UTILITIES SUPPLIES TAXES INSURANCE $250,000 50.000 100,000 50.000 50,000 ESTIMATED TOTAL COST $500,000 ESIMATED TOTAL LABOR HOURS 200,000 PREDERTERMINED OH RATE 12.50 Transactions:

Answer 1

Answer-1:

No.	Account Title	Debit	Credit
1	Cash	$   2,500,000
	Common stock		$      250,000
2	Raw material inventory	2,750,000
	Account payable		2,750,000
3	Work in process inventory	2,500,000
	Raw material inventory		2,500,000
4	Work in process inventory	4,200,000
	Wages payable		4,200,000
5	Work in process inventory	525,000
	Manufacturing overhead (210,000 × $2.50)		525,000
6	Finished goods inventory (10,000 * $700)	7,000,000
	Work in process inventory		7,000,000
7	Account receivable	18,900,000
	Sales		18,900,000
8	Cost of goods sold	6,300,000
	Finished goods inventory		6,300,000
9	Manufacturing overhead	550,000
	Cash		350,000
	Accumulated depreciation		200,000
10	Cost of goods sold	25,000
	Manufacturing overhead		25,000
	(to close under applied balance to COGS)
11	Selling expense	1,890,000
	Cash		1,890,000
12	Office and administration expense	1,000,000
	Cash		1,000,000

Answer-2:

Cash 2500000 Common stock 2500000 RM inventory 2750000 2500000 Account payable 2750000 Wages payable 4200000 350000 1890000 1000000 WIP inventory 2500000 7000000 4200000 525000 225000 4200000 740000 2500000 250000 2750000 Manufacturing overhead 550000525000 25000 FG inventory 7000000 6300000 Account receivable 18900000 Sales 18900000 COGS 6300000 25000 Acc dep. 200000 700000 18900000 18900000 6325000 200000 Selling exp 1890000 Office exp 1000000 1890000 1000000

Answer-4:

Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw materials inventory $ - Add: Purchase of raw materials 2,750,000 Total raw materials available 2,750,000 Less: Ending raw materials inventory 250,000 Raw materials used in production Direct labour Manufacturing overhead applied to work in process Total manufacturing costs Add: Beginning WIP inventory 2,500,000 4,200,000 525,000 4,725,000 Less: Ending WIP inventory Cost of goods manufactured 4,725,000 225,000 $ 4,500,000

Answer-5:

Schedule of Cost of Goods Sold Beginning finished goods inventory Add: Cost of goods manufactured 4,500,000 Cost of goods available for sale Less: Ending finished goods inventory Unadjusted cost of goods sold Add: Under-applied ovehead Adjusted cost of goods sold 4,500,000 700,000 3,800,000 25,000 3,825,000