Question

Rider Co. is a leading manufacturer of bikes for children. Alexis, the former head managerial accountant managed to wipe the accounting records before she quit, and as such, Rosalie, the new head managerial accountant, has been asked to find the missing information so that the VP of Finance, Chris, can present the information to the CFO. She was able to recover the following information: • Raw materials beginning balance was $30,000 • Work in process beginning balance was $80,000 • Salaries were $475,000, of which $125,000 was indirect labour. • Included in the MOH were costs of $65,000 for utilities, $40,000 for rent, $24,000 for depreciation, $14,000 for insurance and $6000 for property taxes • Material purchases were $205,000 and DM requisitions were $215,000. Ending balance of raw materials was $5000. • They sold 10,000 bikes for $150/unit. Each bike had a cost of $87.40 • Finished goods ending inventory was $120,000 • Ending work in process was $50,000

Required:

Prepare T-accounts for Raw Materials, Work in Process Inventory, Finished Goods inventory, Factory Labour, and Manufacturing Overhead.

Prepare a cost of good manufactured schedule Prepare an income statement (including a full cost of goods sold schedule). Assume operating expenses are $550,000

Prepare the assets section of the balance sheet. Assume the following balances: cash $17,000, accounts receivable $120,000, and prepaid expenses $13,000.

Answer 1

Dr Particulars Beginning Balance Cash Raw Materials in $ Particulars 30,000 Work in Process 2,05,000 Manufacturing OH (bal.fig.) Cr in $ 2,15,000 15,000 Ending Balance 2,35,000 Total 5,000 2,35,000 Total in $ 8,84,000 Dr Particulars Beginning Balance Raw Materials Factory Labor Manufacturing OH (bal.fig.) Total Work-in-Process in $ Particulars 80,000 Finished goods (bal.fig.) 2,15,000 3,50,000 2,89,000 Ending Balance 9,34,000 Total 50,000 9,34,000 Dr Particulars Beginning Balance (bal.fig.) Work in Process Cr in $ 8,74,000 Finished goods in $ Particulars 1,10,000 Cost of goods sold 8,84,000 (10000*87.40) Ending Balance 9,94,000 Total 1,20,000 9,94,000 Total Dr in $ 2,89,000 Particulars Raw Materials Factory Labor Rent Utility costs Depreciation Insurance Property Taxes Total Manufacturing OH in $ Particulars 15,000 Work in Process 1,25,000 40,000 65,000 24,000 14,000 6,000 2,89,000 Total 2,89,000 Particulars Cash in $ Factory Labor in $ Particulars 4,75,000 Manufacturing OH Work in Process (475000-125000 4,75,000 Total 1,25,000 3,50,000 4,75,000 Total

Rider Co. Cost of Goods Manufactured For the Year ended Cost of Raw Materials issued to production (+) Direct Labor (+) Manufacturing OH applied (+) Beginning Work-In-Progress Inventory Sub-Total (-) Ending Work-In-Progress Inventory Cost of Goods Manufactured 2,15,000 3,50,000 2,89,000 80,000 9,34,000 -50,000 8,84,000 Rider Co. Income Statement For the Year ended (10000*150) $ 15,00,000 Sales for the year (-) Cost of goods sold Beginning Finished Goods Inventory (+) Cost of Goods manufactured (-) Ending Finished Goods Inventory $ 1,10,000 8,84,000 1,20,000 $ Gross Profit (-) Other Operating expenses Net Income 8,74,000 6,26,000 -5,50,000 76,000 S Rider Co. Balance Sheet (Asset section) For the Year ended Assets Cash Accounts Receivable Prepaid expenses Raw Material Inventory Work-in-Process Inventory Finished Goods Inventory 17,000 1,20,000 13,000 5,000 50,000 1,20,000 Total Assets $ 3,25,000