Question

Eroya 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 $360,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $200,000. b. Raw materials used in production (all direct materials), $185,000. c. Utility bills incurred on account, $70,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (975 hours) $ 230,000 Indirect labor $ 90,000 Selling and administrative salaries$ 110,000 e. Maintenance costs incurred on account in the factory, S54,000. f. Advertising costs incurred on account, $136,000. 8. Depreciation was recorded for the year, 595,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $120,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities). i. Manufacturing overhead cost was applied to jobs, $ ? j. Cost of goods manufactured for the year, S770,000. k. Sales for the year (all on account) totaled $1,200,000. These goods cost $800,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials $30,000 Work in Process $21,000 Finished Goods $60,000 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) FORMULAS Sign in НОМE INSERT PAGE LAYOUT DATA REVIEW VIEW FILE E AutoSum + Fill- X Cut a copy Calibri -|11 Wrap Text General Normal Bad Good 4 4 Conditional Format as Neutral Formatting Table- Sort & Find B Filter- Select Paste Calculation Check Cell Insert Delete Format BIU- E Merge & Center *Format Painter Clear Cipboard Font Alignment Number Styles Cels Editing M47 г м Accounting titles & Explariations Raw materials inventory Accounts payable Debit Credit 200,000 a) 4 200,000 work in process inventory b) 185,000 Raw materials inventory 185,000 c) manufacturing overhead 63000 10 utility exponse 7000 11 Accaunts payable 70,000 12 work in process inventory 13 230,000 (P Manufacturing overhead Salary expense 14 90,000 15 110,000 Salary & wages payable 16 430,000 17 Manufacturing overhead 18 51,000 e) 19 Accounts payable 54.000 20 Advertising expense 21 f) 136,000 22 Accournts payable 136,000 24 Manufacturing overhead 76000 25 Depreciation expense 19000 Accumulated depreciation 76 95,000 27 Manufacturing overhead h) 102000 29 18000 Rent expense Accounts payable 120,000 Sheet1 READY 9:12 AM P Type here to search A ENG 1/28/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) FORMULAS Sign in HOME INSERT PAGE LAYOUT DATA REVIEW VIEW FILE E AutoSum + Fill- X Cut Oa copy Calibri -|11 Wrap Text General Normal Bad Good 4 4 Conditional Format as Neutral Formatting Table- F Merge & Center Check Cell Sort & Find B Paste Calculation Insert Delete Format BIU- *Fomat Painter Clear Filter- Select- Clpboard Font Alignment Number Styles Cels Editing Y126 г м 27 Manulacturing overhead 28 h) 102000 29 Rent expense 18000 30 Accounts payable 120,000 31 Work in process inventory Manufacturing overhead 390,000 37 i) 33 390.000 34 finished goods inventory Work in process inventory 35 il 770.000 36 770,000 37 1,200,000 38 k) Accournts receivable 39 sales 1,200,000 40 cost of goods sold 41 800,000 finished gnods inventory 47 800,000 43 11 Accounts receivable Sales 45 Beg.bal Beg. bal 1,200,000 k. 46 k. 1,200,000 47 1,200,000 48 end bal 1,200,000 erid bal 19 50 Raw Materials cost of goods sold Вев, Bal 51 Beg.Bal 30,000 185,000 b. 57 200,000 k. R00,000 a. 53 51 55 End bal End bal 45,000 800,000 56 Sheet1 READY 9:18 AM P Type here to search A ENG 1/28/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) FORMULAS Sign in HOME INSERT PAGE LAYOUT DATA REVIEW VIEW FILE X Cut Oh copy > AutoSum -|11 Calibri Wrap Text General Normal Bad Good + Fill- ! 4 Conditional Format as Neutral Formatting Table- Sort & Find B Filter- Select Paste в IV Calculation Check Cell Insert Delete Format E Merge & Center Clear * Fomat Painter Cipboard Font Alignment Number Styles Cels Editing Y126 к м Manufacturing overhead Brg. Bal Work in process 57 Beg Bal 58 21,000 63000 390,000 i 59 185,000 770,000 j b. c. 90,000 54,000 60 d. d. 230,000 61 i. 390000 62 76000 8. end bal 102000 63 56,000 h. 61 5,000 End bal finished goods 65 Advertising expense Beg bal 66 60,000 Bog.bal 770,000 800,000 k 67 f. 136,000 68 69 30,000 end bal End bal 136,000 70 71 Accumulated Depreciation Utilities expense Rrg bal 77 beg.bal 73 95,000 g 7000 C. 74 75 End bal end bal 95,000 7,000 76 Salaries axpense 77 Accounts payable Beg. Bal 78 Beg.bal 79 200,000 a. d. 110,000 80 70,000 c. 54,000 e. 136,000 f. 81 83 120,000 h. 81 end bal end bal 690,000 110,000 85 Sheet1 READY 9:19 AM P Type here to search A ENG 1/28/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) FORMULAS Sign in HOME INSERT PAGE LAYOUT DATA REVIEW VIEW FILE X Cut D Copy > AutoSum Calibri -|11 Wrap Text General Normal Bad Good + Fill- ! 4 Conditional Format as Neutral Formatting- Table- Sort & Find B Filter- Select Paste в IV === 4 Merge & Center Calculation Check Cell Insert Delete Format BIU- *Fomat Painter Clear Cipboard Font Alignment Number Styles Cels Editing Y126 м Г к 85 86 87 Depreciation expense Salaries & wages payable 88 Beg.bal Вед.bal 89 19000 430,000 d. 19,000 90 End bal end bal 430,000 91 92 rent expense 93 beg bal 94 h. 18000 18,000 95 End bal 96 97 98 overhead applied - 360,000/900*975- 390000 99 100 Schedule of Cost of Goods Manufactured 101 Direct Materials: 102 Beginning raw materials inventory 30,000 103 Add:purchase of raw materials 200,000 104 Total raw materials available 230,000 105 less:Ending raw materials inventory Materials used in production 45,000 185,000 230,000 106 107 108 Direct Labor Manufacturing overhead applied to work in process 390000 total manufacturing costs Add:Reginning work in process inventory 109 805,000 110 21,000 826,000 56,000 111 112 less:Ending work in process inventory 113 Cost of goods manufactured 770,000 114 Sheet1 READY с е к] 9:19 AM P Type here to search A ENG 1/28/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) FORMULAS Sign in HOME INSERT PAGE LAYOUT DATA REVIEW VIEW FILE X Cut a copy > AutoSum Calibri -|11 Wrap Text General Normal Bad Good + Fill- ! 4 Conditional Format as Neutral Formatting- Table- Sort & Find B Filter- Select Paste Calculation Check Cell Insert Delete Format BIU- E Merge &Center E *Fomat Painter Clear Cipboard Font Alignment Number Styles Cels Editing Y126 г м 114 115 116 General journal Debit Credit No TR 1 manufacturing overhead 117 5,000 118 5,000 cost of goods sold 119 120 Schedule of Cost of goods sold 121 122 Beginning finished poods inventory 60,000 Add:Cost of goods manufactured Cost of gnods available for sale 123 770,000 174 830,000 125 less:ending firnished guods inventory 30,000 126 Unadjusted cost of goods sold less:overapplied overhead 800,000 127 5,000 128 Adjusted cost of goods sold 795,000 179 130 Income statement 131 1,200,000 Sales 132 cost of goods sold Gross margin 795,000 133 405.000 134 Selling and administrative expense Utilities expense 135 7000 136 ANdvertising expense Salaries expense 136,000 137 110,000 138 Depreciation expense 19,000 139 rent expense 18000 140 290,000 Net operating income 11 115,000 142 143 Sheet1 READY 920 AM P Type here to search A ENG 1/28/2020