Question

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Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows: Morrison Company Dalance Sheet 44,250 $11,100 7,050 Work in process Finished goods 28,500 ,650 2,075 Pzoperty, plant, and equipment (net 224,000 Liabilities and Stockholders Equity Accountsa payable Retained earninga Total 1iabilities and stockholders' equity 13,900 303,075 16.97 During January the company completed the following transactions: a. Purchased raw materials on account, $86,200 b. Raw materials used in production, $94,200 $82,400 was direct materials and $11,800 was indirect materials) c. Paid $195,800 of salaries and wages in cash ($113,600 was direct labor, $44,250 was indirect labor, and $37,950 was related to employees responsible for selling and administration). d. Various manufacturing overhead costs incurred (on account) to support production, $39,450 e. Depreciation recorded on property, plant, and equipment, $103,600(70% related to manufacturing equipment and 30% related to assets that support selling and administration) t Various selling expenses paid in cash, $27,950 g. Prepaid insurance expired during the month, $1,250 (80% related to production, and 20% related to selling and administration). h. Manufacturing overhead applied to production,$150,800 L Cost of goods manufactured, $307,300 J Cash sales to customers, $421,880. k. Cost of goods sold (unadjusted), $304,200. L Cash payments to creditors, $72,800

Answer 1

since morrison company does not pay any dividnds ,its net operating income for the month of january equals the change in the balance of its retained earnings account ($361475 - $303075 = $58400 ) .