Question

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 $357,000 of manufacturing overhead for an estimated allocation base of 1,020 direct labor-hours. The following transactions took place during the year:

1. Raw materials purchased on account, $260,000.
2. Raw materials used in production (all direct materials), $245,000.
3. Utility bills incurred on account, $71,000 (80% related to factory operations, and the remainder related to selling and administrative activities).
4. Accrued salary and wage costs:

Direct labor (1,095 hours)	$	290,000
Indirect labor	$	102,000
Selling and administrative salaries	$	170,000

5. Maintenance costs incurred on account in the factory, $66,000
6. Advertising costs incurred on account, $148,000.
7. Depreciation was recorded for the year, $84,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).
8. Rental cost incurred on account, $109,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities).
9. Manufacturing overhead cost was applied to jobs, $ ? .
10. Cost of goods manufactured for the year, $890,000.
11. Sales for the year (all on account) totaled $1,800,000. These goods cost $920,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were:

Raw Materials	$	42,000
Work in Process	$	33,000
Finished Goods	$	72,000

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.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account.

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.

Journal Entry Worksheet

• 1

  The raw materials were purchased for use in production, $260,000 on account.

• 2

  The raw materials used in production (all direct materials), $245,000.

• 3

  The utility bills were incurred, $71,000 (80% related to factory operations, and the remainder related to selling and administrative activities).

• 4

  The salary and wage costs incurred were $290,000 (Direct labor), $102,000 (Indirect labor), $170,000 (Selling and administrative salaries).

• 5

  The maintenance costs were incurred in the factory, $66,000.

• 6

  The advertising costs were incurred, $148,000.

• 7

  The depreciation was recorded for the year, $84,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment).

• 8

  The entry for rental cost incurred on account, $109,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities).

• 9

  The entry for manufacturing overhead cost applied to jobs.

• 10

  The cost of goods manufactured for the year, $890,000.

• 11

  The sales for the year (all on account) totaled $1,800,000.

• 12

  The goods cost $920,000 according to their job cost sheets.

Answer 1

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FORMULAS DATA REVIEW VIEW LE CODY 2 AutoSumA , AA == = = 5. FILE HOME INSERT PAGE LAYOUT X Cut Calibri - 11 Paste Format Painter BIL Cipboard Font L119 X fire D [ I G H EX D Normal Conditional Format as Neutral Formatting Table Bad Calculation Good Check Cell Wrap Test * Merge & Center - Alignment Number $ % Number A = Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells L L M P Q R S T U V W X Y Z I J K Accounting titles & Explanations Raw materials inventory Accounts payable N O Debit Credit 260,000 260,000 work in process inventory Raw materials inventory 245,000 245,000 manufacturing overhead utility expense Accounts payable 56800 14200 71,000 work in process ir ventury Manufacturing overhead Salary expense Salary & wages payable 290,000 102,000 170,000 562,000 66,000 Manufacturing overhead Accounts payable 66,000 148,000 Advertising expense Accounts payable 148,000 Manufacturing overhead Depreciation expense Accumulated depreciation 63000 21000 84,000 Manufacturing overhead Rent expense Accounts payable 87200 21800 109,000 Sheet1 READY E : Type here to search Bê ew QC e x2 6:57 AM ING 5/16/2019

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Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FORMULAS DATA REVIEW VIEW AA Copy 2 AutoSumA , == = = 5. FILE HOME INSERT PAGE LAYOUT Cut Calibri - 11 Paste Pages Fomat painter BIL Cipboard Font 185 X fire 2D [ G Wrap Text Merge & Center - H EX D Normal Conditional Format as Neutral Formatting Table Bad Calculation Good Check Cell Number $ % Number A = * Insert Delete Insert Delete Format - Sort Find B Filter - Select- Editing Alignment Styles Cells L I J K L M N O P Q R S T U V W X Y Z _ rent expense beg bal 21800 21,800 End bal overhead applied - 357000/1020*1095- 383250 Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw materials inventory Add purchase of raw materials Total raw materials available less:Ending raw materials inventory Materials used in production Direct Labor Manufacturing overhead applied to work in process total manufacturing costs Add:Beginning work in process inventory 42,000 260,000 302,000 57,000 245,000 290,000 383250 918,250 33,000 951,250 61,250 890,000 less:Ending work in process inventory Cost of goods manufactured No TR Debit Credit 117 General journal 1 manufacturing overhead cost of goods sold 8,250 B.250 118 119 120 Sheet1 READY Type here to search o ew 9C e A ING 658 AM 6/16/2019 1

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? FORMULAS DATA REVIEW VIEW - ox Sign in Α Α Ε Χ ΕΙ Σ Autnum Α de Copy 5. FILE HOME INSERT PAGE LAYOUT Cut Calibri - 11 Paste Fomat Painter BIU Cipboard Font R137 ! 2D [ G AA A' == == Wrap Text * Merge & Center - Alignment General $ % Number D Normal Conditional Format as Neutral Formatting Table Bad Calculation = Good Check Cell Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells L I J K L M N O P Q R S T U V W X Y Z _ Schedule of Cost of goods sold Beginning finished goods inventory Add:Cost of Foods manufactured Cost of goods available for sale less:ending finished goods inventory Unadjusted cost of goods sold less.overapplied overhead Adjusted cost of Foods sold 72,000 890,000 962,000 42.000 920,000 3,250 911,750 1,800,000 911.750 888,250 Income statement Sales cost of goods sold Gross margin Selling and administrative expense Utilities expense Advertising expense Salaries expense Depreciation expense rent expense 14200 148,000 170,000 21,000 21800 139 140 375,000 513.250 Net operating income 112 144 145 146 147 148 149 Sheet1 READY : Type here to search Bê ew @Ce x] AANO 658 AM ING 5/16/2019