Question

Requiem un Problem 15-2A Source documents, journal entries, overhead, and financial reports LO P1, P2, P3, P4 (The following information applies to the questions displayed below.) Bergamo Bay's computer system generated the following trial balance on December 31, 2019. 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 Wages Payable) has not been recorded. Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Notes payable Common stock Retained earnings Debit $ 79,000 48,000 29.000 0 12,000 4,000 $ 10,500 13,500 40,000 83,000 211,000 Sales Cost of goods sold Factory overhead Operating expenses Totals 117,000 25,000 44,000 $350,000 $358,000 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: Materials requisition 21-3011 Materials requisition 21-3012: Labor time ticket 6052 Labor time ticket 6053 Labor time ticket 6054: $ 4,800 direct materials to Job 402 $ 7,300 direct materials to Job 404 $ 2,000 indirect materials $ 7,000 direct labor to Job 402 $13,000 direct labor to Job 404 $ 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.

Answer 1

1) Credit ($4800 + $7300] $12,100 $2,000 Transaction General Journal Debit Work in Process Inventory $12,100 Raw Materials Inventory (To record direct materials issued to job 402 & job 404) b) Factory Overhead $2,000 Raw Materials Inventory (To record indirect materials issued to production) c) Work in Process Inventory $20,000 Factory Wages Payable (To record direct labor cost for job 402 & job 404) Factory Overhead $5,000 Factory Wages Payable (To record indirect labor cost in production) Work in Process Inventory $20,000 Factory Overhead (To record factory overhead applied to production) [$7000 + $13000] $20,000 $5,000 --> 100% of direct labor cost --> $20000 x 100%] $20,000 Revised Factory Overhead Account End. Bal. from Trial Balance $25,000 $20,000 Factory Overhead Applied Indirect Materials $2,000 Indirect Labor $5,000 Revised Ending Balance $12,000

BERGAMO BAY COMPANY Trial Balance December 31, 2019 Account Titles Debit Cash $79,000 Accounts Receivable $48,000 Raw Materials Inventory $14,900 Work in Process Inventory $52,100 Finished Goods Inventory $12,000 Prepaid Rent $4,000 Accounts Payable Factory Wages Payable Notes Payable Common Stock Retained Earnings Sales Cost of Goods Sold $117,000 Factory Overhead $12,000 Operating Expenses $44,000 Totals $383,000 Credit [No change] [No change) [Ref: Entries 1a, & 1b --> $29000 - $12100 - $2000] [Ref: Entries 1a, 10 & 1e --> $12100 + $20000 + $20000] [No change] [No change] $10,500 [No change] $25,000 (Ref: Entries 10 & 1d --> $20000 + $5000] $13,500 [No change) $40,000 [No change) $83,000 [No change] $211,000 [No change] [No change] [Ref: Revised Factory Overhead Account prepared in Part-2] [No change] $383,000

BERGAMO BAY COMPANY Income Statement For Year Ended December 31, 2019 Sales $211,000 Cost of Goods Sold $117,000 Gross Profit $94,000 Factory Overhead $12,000 Operating Expenses $44,000 Operating Income $38,000 Workings: BERGAMO BAY COMPANY Statement of Retained Earnings For Year Ended December 31, 2019 Retained Earnings, beginning balance Add: Net Income $38,000 Less: Dividends Net Increase in Retained Earnings Retained Earnings, ending balance $83,000 [Ref: Income Statement] $0 $38,000 $121,000

Assets Current Assets: Cash Accounts Receivable Raw Materials Inventory Work in Process Inventory Finished Goods Inventory Prepaid Rent BERGAMO BAY COMPANY Balance Sheet December 31, 2019 Liabilities & Shareholders' Equity Current Liabilities: $79,000 Accounts Payable $10,500 $48,000 Factory Wages Payable $25,000 $14,900 Total Current Liabilities $35,500 $52,100 Long-Term Liabilities: $12,000 Note Payable $13,500 $4,000 Total Liabilities $49,000 --> (A) Shareholders' Equity: Common Stock $40,000 Retained Earnings $121,000 (Ref: Statement of Ret. Earnings] Total Shareholders' Equity $161,000 --> (B) $210,000 Total Liab. & Shareholders' equity_$210,000 --> (A) + (B) Total Assets