Question

Problem 3-15 Journal Entries; T-Accounts; Financial Statements [LO3-1, LO3-2, LO3-3, LO3-4] points 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 $395,600 of manufacturing overhead for an estimated allocation base of 920 direct labor-hours. The following transactions took place during the year: eBook a. Raw materials purchased on account, $290,000. b. Raw materials used in production (all direct materials), $275,000. c. Utility bills incurred on account, $77,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Print References Direct labor (970 hours) Indirect labor Selling and administrative salaries $ 320,000 $ 108,000 $ 200,000 e. Maintenance costs incurred on account in the factory, $72,000 f. Advertising costs incurred on account, $154,000. g. Depreciation was recorded for the year, $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $115,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). i. Manufacturing overhead cost was applied to jobs, $_?_ j. Cost of goods manufactured for the year, $950,000. k. Sales for the year (all on account) totaled $2,100,000. These goods cost $980,000 according to their job cost sheets The balances in the inventory accounts at the beginning of the year were: Daw Materials Work in Process Finished Goods $ 48,000 $ 39,000 $ 78,000 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.) 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.

Answer 1

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FILE FORMULAS DATA REVIEW VIEW AA Copy 2 AutoSumA , == = = 5. HOME INSERT PAGE LAYOUT Cut Calibri - 11 Format Painter BIU Cipboard Font : x fit D [ I G H EX Bad Calculation Good Check Cell Paste D Normal Conditional Format as Neutral Formatting Table A Wrap Text + Merge & Center - Alignment General $ % ) Number = Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells M47 L I J K M N O P Q R S T U V W X Y Z Credit Accounting titles & Explanations Raw materials inventory Accounts payable Debit 290,000 290,000 275,000 work in process inventory Raw materials inventory 275,000 manufacturing overhead utility expense Accounts payable 69300 7700 77,000 work in process inventory Manufacturing overhead Salary expense Salary & wages payable 320,000 108,000 200,000 628,000 72,000 Manufacturing overhead Accounts payable 72,000 154,000 Advertising expense Accounts payable 154,000 Manufacturing overhead Depreciation expense Accumulated depreciation 67500 22500 90,000 Manufacturing overhead Rent expense Accounts payable 92000 23000 115,000 Sheet1 © READY EU-I 1052 AM – Type here to search o B e w 9C e x2 A ING 2/11/2020

? - ox Sign in I X Auto Sum-AY ! Copy 5. Froya Fabrikker xlsx - Excel (Product Activation Failed) FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW Cut Calibri - 11 AA == Wrap Text General D Normal Paste Fomat painter BIL A = = = Merge & Center. $ % Conditional Format as Neutral Formatting Table Cipboard Font Alignment Number M47 : X fire D [I GLIJ K L M N O P Q Bad Calculation Good Check Cell Insert Delete Format Sort Find B Filter - Select- Editing Styles Cells R S T U V W X Y Z Manufacturing overhead Rent expense Accounts payable 92000 23000 115,000 417,100 Work in process inventory Manufacturing overhead 417,100 950,000 finished goods inventory Work in process inventory 950,000 2,100,000 Accounts receivable Sales 2,100,000 980,000 cost of goods sold finished goods inventory 980,000 Accounts receivable Berbal 2,100,000 Sales Beg.bal 2,100,000 k. end bal 2,100,000 2,100,000 end bal Raw Materials Beg.Bal 48,000 290,000 cost of goods sold Beg.Bal 980,000 275,000 h. End bal 63,000 End bal 980,000 Sheet10 READY EU-I Type here to search o e Ô wie C e x] A 10:52 AM ING 2/11/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FILE FORMULAS DATA REVIEW VIEW Copy AA A' 2 AutoSumA , == = = H EX Bad Calculation D Normal Conditional Format as Neutral Formatting Table Good Check Cell Paste Wrap Text * Merge & Center - Alignment General $ % Number = Insert Delete Insert Delete Format - Sort Find B Filter - Select- Editing Styles Cells M47 D 5. HOME INSERT PAGE LAYOUT Cut Calibri - 11 Format Painter B I U Cipboard Font : X fit r G Work in process Beg Bal 39,000 275,000 320,000 417100 L J O P Q R S T U V W X Y Z 950,000 K L M N Manufacturing overhead Beg.Bal 69300 417.100 i 108,000 72,000 67500 92000 8,300 End bal Advertising expense Bog.bal 154,000 end bal 101 100 finished goods Bee bal 78,000 950,000 980,000 k End bal 18,000 end bal 151,000 Accumulated Depreciation beg. bal 90,000 Utilities expense Beg bal 7700 End bal 90,000 end bal 7,700 Accounts payable Beg.bal Salaries expense Beg. Bal 200,000 290,000 a. 77,000 C. 72,000 e. 154,000 t. 115,000 h. 690,000 end bel end bal 200,000 Sheet1 6 READY EU-I Type here to search o e ê w 9C e A 10:52 AM ING 2/11/2020

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FORMULAS DATA REVIEW VIEW Copy 2 AutoSumA , AA A 5. FILE HOME INSERT PAGE LAYOUT Cut Calibri - 11 Paste ce Format Painter B IU Cipboard Font M47 : X for 2D [ G == = = Wrap Text Merge & Center - H EX Bad Calculation D Normal Conditional Format as Neutral Formatting Table Good Check Cell General $ % ) Number = . 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 _ Salaries & wages payable Berbal Depreciation expense Beg.bal 22500 End bal 22,500 628,000 d. 628,000 end bal rent expense beg bal 23000 23,000 End bal overhead applied - 395600/920*970- 117100 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 48,000 290,000 338,000 63,000 275.000 320,000 117100 1,012,100 39,000 1,051,100 101,100 950,000 113 114 less:Ending work in process inventory Cost of goods manufactured 115 Sheet1 READY EU-I – Type here to search o e ê w 9C e ENG 1052 AM 172

Froya Fabrikker xlsx - Excel (Product Activation Failed) ? - ox Sign in FILE FORMULAS DATA REVIEW VIEW AA Copy 2 AutoSumA , == = = Wrap Text Merge & Center - 5. HOME INSERT PAGE LAYOUT Cut Calibri - 11 Format Painter BIU Cipboard Fom : X fi D [ I G H EX Bad Calculation D Normal Conditional Format as Neutral Formatting Table Good Check Cell Paste A General $ % ) Number = + Insert Delete Format Sort Find B Filter - Select- Editing Alignment Styles Cells M47 L I J K M N O P Q R S T U V W X Y Z No TR Credit General lournal l manufacturing overhead cost of goods sold Debit 8,300 1 8,300 Schedule of Cost of goods sold Beginning finished Foods inventory Add:Cost of goods manufactured Cost of gnads available for sale less:ending finished goods inventory Unadjusted cost of goods sold less.overapplied overhead Adjusted cost of goods sold 78,000 950,000 1,028,000 48,000 980,000 8,300 971,700 2,100,000 971,700 1,128,300 Income statement Sales cost of goods sold Gross margin Selling and administrative expense Utilities expense Advertising expense Salaries expense Depreciation expense rent expense 7700 151,000 200,000 22,500 23000 141 407,200 721,100 Net operating income 142 143 Sheet1 READY 10:52 AM Type here to search o e ê w 9C e ENG 2/11/2020