Question

Conundrum Corporation manufactures furniture. Due to a fire in the administrative offices, the accounting records for November of the current year were partially destroyed. You have been able to piece together the following information from the ledger Raw-Material Inventory 40,000 Bal. 11/30 45,000 Accounts Payable 12,000 Bal. 10/31 Work-in-Process Inventory Bal. 10/31 8,000 Finished-Goods Inventory Bal. 10/31 35,000 Manufacturing Overhead 60,000 Cost of Goods Sold Wages Payable 1,500 Bal 11/30 Sales Revenue Accounts Receivable Bal. 10/31 8,000 Upon examining various source documents and interviewing several employees, you were able to gather the following additional information. a. Collections of accounts receivable during November amounted to $205,200. b. Sales revenue in November was 120 percent of cost of goods sold. All sales are on account. c. Overhead is applied using an annual predetermined overhead rate using direct-labor hours (based on practical capacity). d. The budgeted overhead for the current year is $720,000. e. Budgeted direct-labor cost for the current year is $960,000. The direct-labor rate is $20 per hour. f. The accounts payable balance on November 30 was $1,000. Only purchases of raw material are credited to accounts payable. A payment of $81,000 was made on November 15. q. November's cost of goods sold amounted to $180,000. h. The November 30 balance in finished-goods inventory was $4,900. i. Payments of $79,500 were made to direct-labor employees during November. The October 31 balance in the Wages Payable account was $1,000. j. The actual manufacturing overhead for November was $60,000. k. An analysis of the furniture still in process on November 30 revealed that so far these items have required 500 hours of direct labor and $20,600 of direct material. Required: a. Calculate the following amounts. b. Complete the T-accounts with the help of the additional information given in the problem.

1.

2.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you.
Raw Material Inventory					Accounts Payable
Debit		Credit			Debit		Credit
Beginning Balance	$      15,000				Payment	$      81,000	Beginning Balance	$      12,000
Purchases	$      70,000		$      40,000				Purchase of Material (Bal)	$      70,000
Ending Balance	$      45,000						Ending Balance	$        1,000
Work in process inventory					Manufacturing overheads
Debit		Credit			Debit		Credit
Beginning Balance	$        8,000	Finished goods	$   149,900			$      60,000	$                                                60,000
Direct Material	$      40,000
Direct Labor	$      80,000
Overhead	$      60,000				Ending Balance
Ending Balance	$      38,100				Cost of Goods Sold
					Debit		Credit
Finished goods inventory					Finished goods	$   180,000
Debit		Credit
Beginning Balance	$      35,000	Cost of goods sold	$   180,000
Work in process	$   149,900
(Balance)
					Wages Payable
					Debit		Credit
Ending Balance	$        4,900				Payment	$      79,500	Bagining balance	$        1,000
							Wage Expense (Balance)	$      80,000
Accounts Receivable
Debit		Credit					Ending Balance	$        1,500
Beginning Balance	$        8,000	Collection	$   205,200
Sale	$   216,000				Sales Revenue
					Debit		Credit
Ending Balance	$      18,800						$180,000*120%	$   216,000
1. Sales revenue for November		$                            216,000
COGS $180,000*120%
2. November 30 Balance in Accounts Receivable		$                              18,800
3. Cost of Raw Material purchased during November		$                              70,000
4. Nov 30 Balance in Work in process inventory		$                              38,100
5. Direct Labor added to WIP		$                              80,000
6. Applied Overhead for November		$                              60,000
7. Cost of goods completed during november		$                            149,900
8. Raw Material Used during November		$                              40,000
9. October 31 Balance in Raw Material inventory		$                              15,000
10. Overapplied/Underapplied overhead		$                                        -