Question

Exercise 7-22 (Static) Assigning Costs to Jobs (LO 7-1, 2)

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm.

1. Purchased $80,000 of materials on account.

2. Issued $4,000 of supplies from the materials inventory.

3. Purchased $56,000 of materials on account.

4. Paid for the materials purchased in transaction (1) using cash.

5. Issued $68,000 in direct materials to the production department.

6. Incurred direct labor costs of $100,000, which were credited to Wages Payable.

7. Paid $106,000 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

8. Applied overhead on the basis of 125 percent of $100,000 direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $50,000.

The following balances appeared in the accounts of Steve’s Cabinets for April.

	Beginning			Ending
Materials Inventory	$	148,200			?
Work-in-Process Inventory		33,000			?
Finished Goods Inventory		166,000		$	143,200
Cost of Goods Sold					263,400

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Complete this question by entering your answers in the tabs below.

• Required A
• Required B

Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Materials Inventory Work-In-Process Inventory Beg. bal. Beg. bal. Finished Goods End. bal. 0 End. bal. 0 Manufacturing Overhead Control Applied Manufacturing Overhead Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Accounts Payable Cash Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Wages Payable Accumulated Depreciation—Property, Plant, and Equipment Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Finished Goods Inventory Cost of Goods Sold Beg. bal. Beg. bal. Goods completed Transfer to Cost of Goods Sold Finished Goods Inventory End. bal. 0 End. bal. 0

• Required A
• Required B

Answer 1

00 Answert y Journal entries Date particulars TLF Debit credit Material Inventory Ab or or $80,000 con TO Accounts payable 9,300 $80,000 Being material purchased] 2. Manufacturing overhead control actor $4,000 $4,000 6. TO Materials Inventory Pre chalerial issued to manufachung 3. Materials Inventory Ale Ox $56,000 G. TO Accounts payable Being Material purchased] 4 Accounts payable Ale or $80,000 To cash $80,000 Being payment for material purchased 5. Work-in. processo direct materiale $68000 - To Materials Inventory 1 $ 68000 Being Material issued to manu feeling process 6. work-in-process-Direct labor Ale or $100000 - To wages payable Being Direct Labor incurred] 7 Manufacturing overhead control Alepy $106000 $106,000 Being amounts paid for utilites ered 8. work in process Overhead Ale or $125000 To Applied manufacturing $125,000 £1100.000 de Being applied manufacturing Overhead is charged to work in process 9. Manufacturing overhead catool for $50,000 TO Accumulated depreciation- $50,000 property, plant 2 equipment Being Depreciation on manufacturing property charged? $100000

Over I Beg. bal b) T- Account Materials Inventory Beg. bal $ 148,200 $4,000 (2) Manufacturing 0 Accounts payable | 80,000 $68,000 5) work in process 3) Accounts payable $56,000 End. bal : 212,200 I work-in-process Inventory $33,000 $240,600 5) Materials Inventory Finished goods $68,000 6) wages payable 100.000 8) Applied manne Lackove $195.000 End.bal $85,400 I Manufacturing overhead control 7 cash $106.000 a) Accumulated depreciach $50,000 2) Materiale Inventory s 4000 Endbal $160,000 Applied Manufacturing overhead. $125.000 8) word in process Overhead $125,000 Eud. bal. Accounts payable (4) cash $ 80.000 $ 80000 Malesials Iuveulory $ 56,000 3) Materials Inventory L $ 56,000 End. bal cash accocent $80,000 4) Accounts payable $106,000 Manufactairing over hea I control $186,000 Gud.bal

wages payable. $ 100,000 67 woške in process $100,000 End.bal Accumcklaled depreciatiou-propera plaut $50,000 9) Mausefacturing Ovey head $50,000 End.bal finished goods Inventory Beg. bal 166000 $ 263,400 Transfer to Goods coupleted $240,600 cost of goods sold End bal $143,200 cost of goods sold. Finished g enoeg $263400 te End.bal $263,400 cast of goods sold opening stocle + purchase - closing stock purchase = cost of goods sold + closing stoele - Opening stock - $263.400 + $ 143,200-$ 166,000 i purchase = $ 240,600.