Question

Journal Entries, T-Accounts, Cost of Goods Manufactured and Sold

During May, the following transactions were completed and reported by Jerico Company:

1. Materials purchased on account, $60,100.
2. Materials issued to production to fill job-order requisitions: direct materials, $50,000; indirect materials, $8,700.
3. Payroll for the month: direct labor, $75,000; indirect labor, $35,000; administrative, $28,000; sales, $19,000.
4. Depreciation on factory plant and equipment, $10,500.
5. Property taxes on the factory accrued during the month, $1,450.
6. Insurance on the factory expired with a credit to the prepaid insurance account, $6,200.
7. Factory utilities, $5,500.
8. Advertising paid with cash, $7,900.
9. Depreciation on office equipment, $800; on sales vehicles, $1,680.
10. Legal fees incurred but not yet paid for preparation of lease agreements, $750.
11. Overhead is charged to production at a rate of $18 per direct labor hour. Records show 4,000 direct labor hours were worked during the month.
12. Cost of jobs completed during the month, $150,000.

The company also reported the following beginning balances in its inventory accounts:

Materials Inventory	$7,500
Work-in-Process Inventory	37,000
Finished Goods Inventory	50,000

Required:

1. Prepare journal entries to record the transactions occurring in May. For a compound transaction, if an amount box does not require an entry, leave it blank.

a.	Materials
	Accounts Payable
b.	Work in Process
	Overhead Control
	Materials
c.	Work in Process
	Overhead Control
	Administrative Expense
	Selling Expense
	Wages Payable
d.	Overhead Control
	Accumulated Depreciation
e.	Overhead Control
	Property Taxes Payable
f.	Overhead Control
	Prepaid Insurance
g.	Overhead Control
	Utilities Payable
h.	Selling Expense
	Cash
i.	Administrative Expense
	Selling Expense
	Accumulated Depreciation
j.	Administrative Expense
	Accounts Payable
k.	Work in Process
	Overhead Control
l.	Finished Goods
	Work in Process

Consider each line of data to determine which accounts are affected and whether the account is to be debited or credited.

2. Prepare T-accounts for Materials Inventory, Overhead Control, Work-in-Process Inventory, and Finished Goods Inventory. Post the entries to the T-account in the same order in which they were journalized.

Materials Inventory
Balance		(b)
(a)
Balance

Work in Process Inventory
Balance		(l)
(b)
(c)
(k)
Balance

Finished Goods Inventory
Balance
(l)
Balance

Overhead Control
(b)		(k)
(c)
(d)
(e)
(f)
(g)
		Balance

3. Prepare a statement of cost of goods manufactured.

Jerico Company
Statement of Cost of Goods Manufactured
For the Month Ended May 31, 20XX
Direct materials		$
Direct labor
Overhead:
Supplies	$
Indirect labor
Depreciation, plant, and equipment
Property taxes
Utilities, factory
Insurance
	$
Add: Overapplied overhead
Overhead applied
Manufacturing costs added		$
Add: Beginning work in process
Less: Ending work in process
Cost of goods manufactured		$

4. If the overhead variance is all allocated to cost of goods sold, by how much will cost of goods sold decrease or increase?
Decreases    by   $____-

Answer 1

I have passed all the journal enteries and they made T Accounts considering same. Cost of goods manufactured is preprared in the giver format and Cost of goods sold will also include selling expenses.

Selling expenses are those expenses which are incurred for the purpose of sale. In the given question,advertisement, depreciation on sales vehicle and selling expenses(given separately in point c) are included in the same.
DATE 1. Journal Enterres :- Particulars Material alc To Accounts Payable figures in $ Credit Debit a 6010 60loo 58700 work in Process Inventory alc To Overhead Control alc To material Inventory q1c Soos 9700 50000

(in $ | 10000 35000 75000 Lc Work in Process alc To Overhead control To wages Payable (L) Administration Expense alc selling expense aic To cash 28000 19000 4700C

d Overhead Contral alc To Accumulated Depreciation 10 500 10500 1450 1450 el Overhead control al To Property taxes payable & Overhead control alc To Prepaid Insurance 6200 6200 5500 g) Overhead control ac 5500 To utilities pay able

Particulars Debit الفير) b) Selling 7900 Expense alc To Cash 7900 i) Administrative Expense alc selling Expense aic TO Accumulated Depreciation 800 1 1680 2480 750 - (J) Administrative expense alc To Accounts Payable 9/0 750 72000 - (K) Work in Process Inventory qic. To Overhead control arc 72000 - (W) Finished Goods alc To wook in Process inventory 150000 150000

2Preparation of I accounts es in $ Materials, Inventory Particulars Amount Particulars Amount To balance bld 7500 By workin Process a) To Accounts Payable 60100 Inventory (6) 50,000 By balance old 17600 67600 67600

poes in $) Particulars Work in Process Amount Inventory Particulars Amount (l) By finished Goods 150000 37000 8700 Sooow By balance ad 1 127700 To balance bid To Overhead control To material Inventory To Overhead Central To overhead control To wages Payable 35000 72000 75000 277700 277po

Dr hinished Amount 50,000 Particulary To balance bid 1) To work in Process inventory Ingures in Goods Inventory Particulars. By balance eld 200000 Amount 150000 200000 200000 Particulars d) To Accumulated depreciation -) To Property Taxes Payable ) To Prepaid Insurance ) To utilities Payable To balance cid (figures in ) Overhead Control Amount Particulars Amount Su By work in Process (6) 8700 10500 By work in Process (c) 35000 By work in Process (K 72000 1450 6200 5500 92050 115700 11579

3. Statement of cost of for Jerico company May 31, 20xx Company – goods do Manufactured for the month ended (figures in & Amount 50,000 9,00 72000 Direct Materials Direct labour Overhead :- Supplies Indirect labour Depreciation on plant & Equipment - Property taxes Utilities, factory Insurance 8700 + 2006 35000 logoo 1450 550o 6200 189350 Add: Overapplied Overhead Manufacturing Cost added (+) Beginning work in Process - Ending work in Process 3000 192350 37000 (1300)(127700 cost of goods manufactured 138050 .101650

4 Calculation of cost of Goods sold : Particulars Amount Cost of goods manufactured Bfo5o 101650 (t) Selling Expenses ; sale Expense (Payroll) Advertisement Depreciation on Sales Vehicle 19000 7900 1690 1. Opening finished Goods Inventory 1) closing finished Goods Inventory Cost of Goods sold % ОД 30 (50000) 1200000) 316630 280230 Credit balance $92050 Overhead Variance from Taccount) Cost of goods sold will decrease by $92050, if the Overhead Variance will be alloated to the sam