Question

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Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows: $ 44,250 Morrison Company Balance Sheet January 1 Assets Cash Raw materials Work in process Finished goods Prepaid expenses Property, plant, and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity $ 13,400 6,300 23,550 43,250 2,375 140,000 $ 229,875 $ 11,400 218,475 $ 229,875 During January the company completed the following transactions: a. Purchased raw materials on account, $80,800. b. Raw materials used in production, $90,100 ($71,200 was direct materials and $18,900 was indirect materials). c. Paid $177,150 of salaries and wages in cash ($102,000 was direct labor, $36,900 was indirect labor, and $38,250 was related to employees responsible for selling and administration). d. Various manufacturing overhead costs incurred (on account to support production, $39,450. e. Depreciation recorded on property, plant, and equipment, $70,000 (70% related to manufacturing equipment and 30% related to assets that support selling and administration). f. Various selling expenses paid in cash, $28,250. g. Prepaid insurance expired during the month, $1,450 (80% related to production, and 20% related to selling and administration) h. Manufacturing overhead applied to production, $132,200. i. Cost of goods manufactured, $292,300. j. Cash sales to customers, $400,320. k. Cost of goods sold (unadjusted), $288,800. 1. Cash payments to creditors, $71,400. m. Underapplied or overapplied overhead_$?_

Answer 1

1	Morrison Company
	Transaction Analysis
	For the Month Ended January 31
	Transaction		Cash	Raw Materials	Work in Process	Finished Goods	Manufacturing Overhead	Prepaid Expense	PP&E (net)	=	Accounts Payable	Retained Earnings
		Beginning balances @1/1	$44,250	$13,400	$6,300	$23,550	-	$2,375	$140,000	=	$11,400	$218,475
	(a)			$80,800						=	$80,800
	(b)			-$90,100	$71,200		$18,900			=
	(c)		-$177,150		$102,000		$36,900			=		-$38,250
	(d)						$39,450			=	$39,450
	(e)						$49,000		-$70,000	=		-$21,000
	(f)		-$28,250							=		-$28,250
	(g)						$1,160	-$1,450		=		-$290
	(h)				$132,200		-$132,200			=
	(i)				-$292,300	$292,300				=
	(j)		$400,320							=		$400,320
	(k)					-$288,800				=		-$288,800
	(l)		-$71,400							=	-$71,400
	(m)	Underapplied overhead					-$13,210			=		-$13,210
		Ending balances @31/1	$167,770	$4,100	$19,400	$27,050	$0	$925	$70,000	=	$60,250	$228,995
2	Net operating income		$10,520