Question

Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor-hours. Its predetermined overhead rate was based on a cost formula that estimated $374,000 of manufacturing overhead for an estimated allocation base of 1,100 direct labor-hours. The following transactions took place during the year:

1. Raw materials purchased on account, $235,000.
2. Raw materials used in production (all direct materials), $220,000.
3. Utility bills incurred on account, $66,000 (90% related to factory operations, and the remainder related to selling and administrative activities).
4. Accrued salary and wage costs:

Direct labor (1,175 hours)	$	265,000
Indirect labor	$	97,000
Selling and administrative salaries	$	145,000

5. Maintenance costs incurred on account in the factory, $61,000
6. Advertising costs incurred on account, $143,000.
7. Depreciation was recorded for the year, $91,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment).
8. Rental cost incurred on account, $116,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities).
9. Manufacturing overhead cost was applied to jobs, $ ? .
10. Cost of goods manufactured for the year, $840,000.
11. Sales for the year (all on account) totaled $1,550,000. These goods cost $870,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were:

Raw Materials	$	37,000
Work in Process	$	28,000
Finished Goods	$	67,000

Required:

1. Prepare journal entries to record the preceding transactions.

2. Post your entries to T-accounts. (Don’t forget to enter the beginning inventory balances above.)

3. Prepare a schedule of cost of goods manufactured.

4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.

4B. Prepare a schedule of cost of goods sold.

5. Prepare an income statement for the year.

Answer 1

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FORMULAS DATA REVIEW VIEW La Copy 2 AutoSumA , AA == = = 5. FILE HOME INSERT PAGE LAYOUT X Cut Calibri - 11 Paste Format painter BIU Cipboard Font M47 : x fit D [ I G H EX D Normal Conditional Format as Neutral Formatting Table Bad Calculation Good Check Cell A Wrap Test + Merge & Center - Alignment General $ % ) Number = Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells L I J K M N O P Q R S T U V W X Y Z Credit Accounting titles & Explanations Raw materials inventory Accounts payable Debit 235,000 235,000 220,000 work in process inventory Raw materials inventory 220,000 manufacturing overhead utility expense Accounts payable 59400 6600 66,000 work in process inventory Manufacturing overhead Salary expense Salary & wages payable 265,000 97.000 145,000 507,000 61,000 Manufacturing overhead Accounts payable 61,000 143,000 Advertising expense Accounts payable 143,000 Manufacturing overhead Depreciation expense Accumulated depreciation 72800 18200 91,000 Manufacturing overhead Rent expense Accounts payable 98600 17400 116,000 Sheet1 READY Type here to search o e ê w 9C e A NG 7:49 AM 2/1/2020

? - ox Sign in Α Α Ε Χ ΕΙ Σ Autnum Α Copy 5. Froya Fabrikker xlsx - Excel (Product Activation Failed) FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Cut Calibri - 11 AA == Wrap Text General D Normal Paste Fomat painter BIL A = = = Merge & Center. $ % Conditional Format as Neutral Formatting Table Cipboard Font Alignment Number M47 : X fire D [I GLIJ K L M N O P Q Bad Calculation Good Check Cell Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells R S T U V W X Y Z Manufacturing overhead Rent expense Accounts payable 98600 17100 115,000 399,500 Work in process inventory Manufacturing overhead 399,500 840,000 finished goods inventory Work in process inventory 840,000 1,550,000 Accounts receivable Sales 1,550,000 870,000 cost of goods sold finished goods inventory 870,000 Accounts receivable Berbal 1,550,000 Sales Beg.bal 1,550,000 k. end bal 1,550,000 1,550,000 end bal Raw Materials Beg Bal3 7,000 235,000 cost of goods sold Beg.Bal 870,000 220,000 h. End bal 52,000 End bal 870,000 Sheet1 READY Type here to search o e wic e x] 750 AM AING 21/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? FILE FORMULAS DATA REVIEW VIEW - ox Sign in Α Α Ε Χ ΕΙ Σ Autnum Α Copy 5. HOME INSERT PAGE LAYOUT Cut Calibri - 11 Format Painter B I U Cipboard Font : X fi D [ G AA A' == = = Paste Wrap Text * Merge & Center - Alignment General $ % Number D Normal Conditional Format as Neutral Formatting Table Bad Calculation Good Check Cell = Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells M47 L I K L M N O P Q R S T U V W X Y Z Work in process Beg Bal 28,000 220,000 d. 265,000 399500 840,000 i Manufacturing overhead Beg. Bel 59400 399,500 i 97,000 61,000 72800 98600 10,700 End bal Advertising expense Beg.bal 143,000 end bel 72,500 finished goods Reg bal 67,000 B40,000 870,000 k End bal 37,000 end bal 143,000 Accumulated Depreciation beg.bal 91,000 Utilities expense Beg bal 6600 End bal 91,000 end bal 6,600 Accounts payable Bee.bal Salaries expense Beg. Bel 145,000 235,000 a. 66,000 C. 61,000 c. 143,000 1. 116.000 h. 690,000 end bal end bal 145,000 Sheet1 READY Type here to search o e w 9 C e x3 A LNG 751 AM 2/1/2020 0

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FILE FORMULAS DATA REVIEW VIEW Copy 2 AutoSumA , AA A == = = 5. HOME INSERT PAGE LAYOUT Cut Calibri - 11 Format Painter B IU Cipboard Fom : X fi D [ I G H EX Bad Calculation Paste ce Good Check Cell Wrap Text Merge & Center - Alignment Is D Normal Conditional Format as Neutral Formatting Table General $ % ) Number = . Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells M47 L I J K M N O P Q R S T U V W X Y Z Depreciation expense Bep.bal 18200 End bal 18,200 Salaries & wages payable Berbal 507,000 d. end bal 507,000 rent expense beg bal h. End bal 17400 17,400 overhead applied - 374000/1100*1175- 399500 Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw materials inventory Add purchase of raw materials Total raw materials available less:Ending raw materials inventory Materials used in productiuni Direct Labor Manufacturing overhead applied to work in process total manufacturing costs Add:Beginning work in process inventory 37,000 235,000 272,000 52,000 220,000 265,000 399500 884,500 28,000 912,500 72.500 840,000 113 114 less:Ending work in process inventory Cost of goods manufactured Sheet1 READY - Type here to search o ewice x] INC 752 AM 2/1/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FILE FORMULAS DATA REVIEW VIEW AA Copy 2 AutoSumA , == = = Wrap Text Merge & Center - 5. HOME INSERT PAGE LAYOUT Cut Calibri - 11 Format Painter BIU Cipboard Fom : X fi D [ I G H EX Bad Calculation D Normal Conditional Format as Neutral Formatting Table Good Check Cell Paste A General $ % ) Number = + Insert Delete Format Sort Find B Filter - Select- Editing Alignment Styles Cells M47 L I J K M N O P Q R S T U V W X Y Z No TR 1 1 General lournal manufacturing overhead cost of goods sold Debit Credit 10,700 10,700 Schedule of Cost of goods sold Beginning finished Foods inventory Add:Cost of goods manufactured Cost of gnads available for sale less:ending finished goods inventory Unadjusted cost of goods sold less.overapplied overhead Adjusted cost of goods sold 67,000 840,000 907,000 37000 870,000 10,700 859,300 1,550,000 859,300 690,700 Income statement Sales cost of goods sold Gross margin Selling and administrative expense Utilities expense Advertising expense Salaries expense Depreciation expense rent expense 6600 113,000 145,000 18,200 17400 141 330.200 360,500 Net operating income 142 143 Sheet1 READY Type here to search lo e w c e 753 AM x] A ENG 2/1/2020 0