Question

1. ) At the beginning of the current year, Mark Products had the following inventory amounts on its balance sheet:

            Raw materials                                                   $12,000

            Work in process                                                  20,000

            Finished goods                                                   35,000

Marks Products estimated that it would incur $60,000 in manufacturing overhead during the year, and that it would operate at a level of 15,000 direct labor hours.  During the current year, the following transactions were completed:

A.         Purchased raw material on account, $8,000.

B.         Raw materials were issued to production, $16,000.  90% of these materials were direct, and 10% were indirect.

C.         Factory payrolls were paid, $49,000.  80% of the factory payroll was direct labor, and 20% was indirect labor.  14,000 direct labor hours were worked.

D.         Administrative payrolls were paid, $12,000.  Sales payrolls were paid, $10,000.

E.         Depreciation on factory equipment, $8,000.

F.         Factory utilities paid, $7,000.

G.         Various administrative expenses incurred and paid, $20,000

H.         Various selling expenses incurred and paid, $15,000.

I.          Various manufacturing overhead costs incurred and paid (other than those indicated above), $30,000.

J.          Manufacturing overhead was applied to production.

K.         Completed production for the current year, $106,600.

L.          Sales to customers for the current year were:

                                    Selling price                              $160,000

                                    Cost                                                ?

            (Ending finished goods inventory, $21,600)   

Required:

a. Prepare T-accounts for Raw Materials, FOH, Work in Process, Finished Goods, and Cost of Goods Sold.  Post the appropriate parts of your journal entries to these T-accounts to determine the ending balance in each account.  (Don't forget to enter the opening balances in the inventory accounts.)

Answer 1

Date solution: Preparing various T-accounts & posting appropriate journal entries is the booly of Marko Products In the books of Marks Products - Raw Materials Alc particulars Amount ($) Particulars Amount($) To Opening Balance bld 12000 To Stores A/c (Direct) 14,400 To Stones Alc (Indirect 1,600 By FOH A/C 1600 By Work in Prours 26,000 28000 28000 FOH A/c Amount ($) Particulars I Particulars or Amount ($) To Raw Materiab Ale 1600 To Wages Alc: 9800 To Depreciation on 8000 factory equipment To Factory utilities 7000 To Other Maripaduring 30000 Overhead coat 5.6400 By Progit & Loss AK 400 (under-absorption) By work in process (56, Qod 56.400

Amount ($) Work in Process A/C Particulars the Amount (8) Particulass To Oponing balance bla 20000 To Raw Materias 26400 By Finished Goods 106600 To Wages de 39200 To Administrative 32000 Overheads Alo TO FOH AIC 56000 By Balance eld (67000) 1736.00 1726.00 Finished Goods Alc Particulars de Amount ($) Particulars To Opening balance beld 35.000 To work in 106600 Process Amount ($) By Cost of Good 120000). Sold Alc By Balance od 21600 141,600 Amount ($) 14160000001 cost of Goods Cold Alc Particulars | Amount ($) Particulars To Finished Goods 120000 To Sales Payroll 10000 To Selling Expenses 15000 By sales All 145000 145000 145000

NETURINTHIYE Other Accounts: - wages All Particulars Amount ($) Particulars Amount To Back Alc (Direct) 39200 By work in Process (39200 To Bank A/ ((Indirect) 9800 By FOHAIL 9800 49000 49000 Particulars To Bank Alc To Bank Alc Administrative Overhead Alc Amounts) Particulars Amount ($) 12000 By wol üs porcos, 32000 20,000 32000 32000 ! Particulars To leat of Goods Sold To Profit & Low All Sales All Amount ($) Particulars Amount 145000 By Trade Receivables 160000 15000 160000 160000 Note 1: Manufactising Overhead Rate :$60000 2 4$/Hn. 15000 Hours Manufacturing Overhead - 14000 Hours x 4$/ He band on Overhead rate - 56000 $ Actual Manufacturing overhead 56400$. .. under-absorption :$56400 $56000 = $4.00