Question

The Cycle More Company manufactures high end bicycles. The controller for the company Ima Sewsique, spent much of the past qarter at home due to a lingering illness. As a result the company records are incomplete The existing records are presented below Beginning Balances 1/1/2018 Raw Materials Inventory Work in Process Finished Goods Inventory 7,500 $7,500 Ending Balances 12/31/2018 Raw Materials Inventory Work in Process Finished Goods Inventory $1,525 $1,025 Additional Information Raw Materials Purchased Cost of Goods Sold (unadjusted) Raw Materials Used in Production Prime Costs Overhead Rate based on Direct Labor Dollars $98,000 $305,000 $103,000 $143,000 400% Required: 1 Prepare T-accounts for all of the Manufacturing Inventory Accounts and Cost of Goods Sold 2. Determine Conversion costs for the period and the total manufacturing costs added to the Work In Process 3. List any direct costs and explain how your determination was made

Answer 1

Raw Material Inventory
Transactions	Debit $	Transactions	Credit $
Beginning Balance 1/1/2018	6,525
Raw Material Purchased	98,000
		Raw material used in Production	103,000
		Ending Balance of Raw material	1,525
TOTAL	104,525	TOTAL	104,525
Work in Process
Transactions	Debit $	Transactions	Credit $
Beginning Balance 1/1/2018	7,500
Raw material used in Production	103,000
Direct Labor cost	40,000	Transferred to finished goods inventory	309,475
Overhead costs	160,000	Ending Balance of Work in Process	1,025
TOTAL	310,500	TOTAL	310,500
Finished Goods Inventory
Transactions	Debit $	Transactions	Credit $
Beginning Balance 1/1/2018	7,500
Transfer from work in process	309,475	Cost of goods sold ( Un adjusted )	305,000
		Ending Balance of Finished goods	11,975
TOTAL	316,975	TOTAL	316,975
Cost of goods sold
Transactions	Debit $	Transactions	Credit $
Finished good inventory	305,000
		Ending Balance of Cost of goods sold	305,000
TOTAL	305,000	TOTAL	305,000
Note;	$
Prime costs	143,000
Less: Raw material used in production	(103,000)
Direct Labor costs	40,000
Overhead costs ( $ 40,000 x 400% )	160,000