Question

Reimel Furniture Company, Inc. incurred the following costs during 20x2.

Direct material used	$	172,000
Direct labor		320,000
Manufacturing overhead		160,000

During 20x2, products costing $120,000 were finished, and products costing $132,000 were sold on account for $193,000. There were no purchases of raw material during the year. The beginning balances in the firm’s inventory accounts are as follows:

Raw material	$	226,000
Work in process		14,000
Finished goods		30,000

Exercise 3-31 Part 1

Required:

1. Prepare T-accounts to show the flow of costs through the company’s manufacturing accounts during 20x2.

Raw-Material Inventory Beg. Bal. Work-in-Process Inventory Beg. Bal. Direct materialſ Direct labor Manufacturing overhead End. Bal. End. Bal. Wages Payable Manufacturing Overhead Beg. Bal. Beg. Bal. End. Bal. End. Bal. Finished-Goods Inventory Sales Revenue Beg. Bal. Beg. Bal. End. Bal. End. Bal. Accounts Receivable Cost of Goods Sold Beg. Bal. Beg. Bal. End. Bal. End. Bal.

2. Prepare a partial balance sheet and a partial income statement to reflect the information given above.

Answer 1

	Raw materials inventory				Work in process inventpry
Beg.Bal	226,000				Beg.Bal	14,000
		172,000	used		DM	172,000
					DL	320,000
end bal	54,000				MOH	160,000
							120,000	finished
					end bal	546,000
	Wages payable				Manufacturing overhead
Beg.bal		0			beg bal		0
		320,000	WIP				160,000	WIP
end bal		320000			end bal		160000
	finished goods inventory				Sales revenue
Beg bal	30,000				Beg.bal		0
WIP	120,000						193,000	A/r
		132,000	COGS
End bal	18,000				End bal		193000
	Account receivable				cost of goods sold
Beg.bal	0				Beg bal	0
sales	193,000				finished	132,000
end bal	193000				End bal	132000
		Partial Balance Sheet
	As of December 31,20X2
Inventory:
Raw material				54,000
Work in process				546,000
Finished goods				18,000
	Partial income statement
Sales revenue				193,000
less: cost of goods sold				132,000
Gross Margin				61,000