1.
Prepare journal entries as follows:
Trn. | General Journal | Debit | Credit |
a | Raw material inventory | $280,000 | |
Accounts payable | $280,000 | ||
b | WIP inventory | $265,000 | |
Raw material inventory | $265,000 | ||
c | Manufacturing overhead ($75000 × 80%) | $60,000 | |
Utility expenses | $15,000 | ||
Accounts payable | $75,000 | ||
d | WIP inventory | $310,000 | |
Manufacturing overhead | $106,000 | ||
Salaries expenses | $190,000 | ||
Wages payable | $606,000 | ||
e | Manufacturing overhead | $70,000 | |
Accounts payable | $70,000 | ||
f | Advertisement expense | $152,000 | |
Accounts payable | $152,000 | ||
g | Manufacturing overhead ($88000 × 85%) | $74,800 | |
Depreciation expense | $13,200 | ||
Accumulated depreciation | $88,000 | ||
h | Manufacturing overhead ($113000 × 90%) | $101,700 | |
Rent expense | $11,300 | ||
Accounts payable | $113,000 | ||
i | WIP inventory | $418,000 | |
Manufacturing overhead | $418,000 | ||
[($399000/1050 direct labor hours) × 1100 hours] | |||
j | Finished goods inventory | $930,000 | |
WIP inventory | $930,000 | ||
k | Accounts receivable | $2,000,000 | |
Sales | $2,000,000 | ||
k.1 | COGS | $960,000 | |
Finished goods inventory | $960,000 |
__________________________________________________________________
2.
Post your entries to T-accounts as follows:
Raw material Inventory | |||
Beg. Bal. | $46,000 | b | $265,000 |
a | $280,000 | ||
End. Bal. | $61,000 | ||
WIP inventory | |||
Beg. Bal. | $37,000 | j | $930,000 |
b | $265,000 | ||
d | $310,000 | ||
i | $418,000 | ||
End. Bal. | $100,000 | ||
Accounts payable | |||
a | $280,000 | ||
c | $75,000 | ||
e | $70,000 | ||
f | $152,000 | ||
h | $113,000 | ||
End. Bal. | $690,000 | ||
Manufacturing overhead | |||
c | $60,000 | i | $418,000 |
d | $106,000 | ||
e | $70,000 | ||
g | $74,800 | ||
h | $101,700 | ||
End. Bal. | $5,500 | ||
Finished goods inventory | |||
Beg. Bal. | $76,000 | k.1 | $960,000 |
j | $930,000 | ||
End. Bal. | $46,000 | ||
COGS | |||
k.1 | $960,000 | ||
End. Bal. | $960,000 | ||
Sales | |||
k | $2,000,000 | ||
End. Bal. | $2,000,000 | ||
Utility expense | |||
c | $15,000 | ||
End. Bal. | $15,000 | ||
Advertisement expense | |||
f | $152,000 | ||
End. Bal. | $152,000 | ||
Salaries expense | |||
d | $190,000 | ||
End. Bal. | $190,000 | ||
Rent expense | |||
h | $11,300 | ||
End. Bal. | $11,300 | ||
Depreciation expense | |||
g | $13,200 | ||
End. Bal. | $13,200 | ||
Accumulated Depreciation | |||
g | $88,000 | ||
End. Bal. | $88,000 | ||
Accounts receivable | |||
k | $2,000,000 | ||
End. Bal. | $2,000,000 | ||
Wages payable | |||
d | $606,000 | ||
End. Bal. | $606,000 |
_____________________________________________________________
3.
Prepare a schedule of cost of goods manufactured
Direct Material: | Amount | |
Raw material inventory, Beginning | $46,000 | |
Add: Purchase of raw material | $280,000 | |
Raw material available | $326,000 | |
Less: Raw material inventory, Ending | ($61,000) | |
Raw material used in production | $265,000 | |
Direct labor | $310,000 | |
Manufacturing overhead applied to WIP | $418,000 | |
Total manufacturing cost | $993,000 | |
Add: WIP inventory, beginning | $37,000 | |
Less: WIP Inventory, Ending | ($100,000) | |
Cost of good manufactured | $930,000 |
_________________________________________________________________________
4.A
Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold
General Journal | Debit | Credit |
Manufacturing overhead | $5,500 | |
Cost of goods sold | $5,500 |
_________________________________________________________________________
4.B
Prepare a schedule of cost of goods sold
Finished goods inventory, Beginning | $76,000 | |
Add: Cost of goods manufactured | $930,000 | |
Cost of goods available for sale | $1,006,000 | |
Less: Finished goods inventory, Ending | ($46,000) | |
Unadjusted COGS | $960,000 | |
Less: overapplied overhead | ($5,500) | |
Adjusted COGS | $954,500 |
______________________________________________________________________
5.
Prepare an income statement for the year.
Income Statement | ||
Sales | $2,000,000 | |
Less: COGS | ($954,500) | |
Gross margin | $1,045,500 | |
Selling and admin. Expense: | ||
Utility expense | $15,000 | |
Salary expense | $190,000 | |
Depreciation expense | $13,200 | |
Rent expense | $11,300 | $229,500 |
Net Income | $816,000 |
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for...
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 $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
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 $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
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 $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
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 $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year. a. Raw materials purchased...
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 $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased...
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 $350,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
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: Raw materials purchased on account,...
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 $351,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
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 $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: Raw materials purchased on account,...
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 $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year a. Raw materials purchased...