Question

Problem 3-15 Journal Entries; T-Accounts; Financial Statements [LO3-1, LO3-2, LO3-3, LO3-4] Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor- hours. Its predetermined overhead rate was based on a cost formula that estimated $399,000 of manufacturing overhead for an estimated allocation base of 1,050 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $280,000. b. Raw materials used in production (all direct materials), $265,000. c. Utility bills incurred on account, $75,000 (80% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,100 hours) Indirect labor Selling and administrative salaries $ 310,000 $ 106,000 $ 190,000 e. Maintenance costs incurred on account in the factory, $70,000 f. Advertising costs incurred on account, $152,000. g. Depreciation was recorded for the year, $88,000 (85% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $113,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities). i. Manufacturing overhead cost was applied to jobs, $_? j. Cost of goods manufactured for the year, $930,000. k. Sales for the year (all on account) totaled $2,000,000. These goods cost $960,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials Work in Process Finished Goods $ 46,000 $ 37,000 $ 76,000 Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 48. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year.

Answer 1

Froya Fabrikker .xlsx - Excel Product Activation Failed) ? - ox Sign in FILE REVIEW VIEW Wrap Text Merge & Center. I Sx Good AutoSum - A A Copy HOME INSERT PAGE LAYOUT FORMULAS DATA Xcut Calibri . 11 A == Format painter BIU S A = = Clipboard Ford - X f -113000*90% General $ % Paste Bad Calculation D Normal Conditional Format as Neutral Formatting Table ) Check Cell insert Delete Format - Sort Find Filter - Select- Eating Alignment Number Styles Cells L63 D E F G H I J K L M N O P Q R S T U V W X Y Z Credit Accounting titles & Explanations Raw materials inventory Accounts payable Debit 280,000 a) 280,000 265,000 work in process inventory Raw materials inventory 265,000 manufacturing overhead 60000 15000 utility expense Accounts payable 75,000 d) work in process inventory Manufacturing overhead Salary expense Salary & wages payable 310,000 106,000 190,000 606,000 70,000 Manufacturing overhead Accounts payable 70,000 f) 152,000 Advertising expense Accounts payable 152.000 Manufacturing overhead Depreciation expense Accumulated depreciation 74800 13200 BB,000 h) Manufacturing overhead 101700 Sheet1 4 READY + 100% – A . .. 10:34 AM : Type here to search o A wiege C 4 ENG 213/2019

Froya Fabrikker .xlsx - Excel Product Activation Failed) ? - ox Sign in FILE REVIEW VIEW Wrap Text Merge & Center. I Sx Good AutoSum - A A Copy HOME INSERT PAGE LAYOUT FORMULAS DATA Xcut Calibri . 11 A == Format painter BIU S A = = Clipboard Font - X V fx -113000*90% General $ % Paste Bad Calculation D Normal Conditional Format as Neutral Formatting Table ) Check Cell insert Delete Format - Sort Find Filter - Select- Eating Alignment Number Styles Cells 163 2 D E F G H K L M O P Q R S T U V W X Y Z I J Manufacturing overhead Hent expense Accounts payable N 101700 11300 113,000 418,000 Work in process inventory Manufacturing overhead 110,000 930,000 finished goods inventory Work in process inventory 930,000 Accounts receivable sales 2,000,000 2,000,000 960,000 cost of goods sold finished guods inventory 960,000 Accounts recelvable Berbal 2,000,000 Sales Bog.bal 2,000,000 k. end bal 2,000,000 2,000,000 end bal Raw Materials Reg.Bal 46,000 280,000 cost of goods sold Brg. Bal 960,000 265,000 b. End bal 61,000 End bal 960,000 Sheet1 HLADY + 100% – . A .. 10:34 AM + Type here to search o Et wie ge ] C A ING 2/13/2019

Froya Fabrikker .xlsx - Excel Product Activation Failed) ? FILE REVIEW - ox Sign in A VIEW Wrap Text Merge & Center - La Copy Good 1 x AutoSum - AY HOME INSERT PAGE LAYOUT FORMULAS DATA Xcut Calibri . 11 A == romat painter B IU ' A = = = Clipboard Font - X fir -113000*90% Paste General $ % Number Bad Calculation D Normal Conditional Format as Neutral Formatting Table ! Check Cell insert Delete Format - Sort Find Filter - Select- Eating Alignment Styles Cells 163 H I J O P Q R S T U V W X Y Z F G Work in process Ber Bal 37,000 265,000 310,000 418000 930,000 i K L M N Manufacturing overhead Beg, Bal 60000 418,000 i 106,000 70.000 71800 1017001 5,500 End bal Advertising expense Bey.bal 152,000 end bal 100,000 finished goods Beg bal 76,000 930,000 960,000 k End bal 46,000 end bal 152,000 Utilities expense Accumulated Depreciation beg, bal 88,000 Berbal 15000 End bal 88,000 end bal 15,000 Accounts payable Berbal Salaries expense Beg.Bal 190,000 280,000 a. 75,000 C 70,000 e. 152,000 f. 113,000 h. 690,000 end bal end bal 190,000 Sheet1 HLADY + 100% - : Type here to search A o wiege C - a mue 1034 AM ENG 2/13/2019

Froya Fabrikker .xlsx - Excel Product Activation Failed) ? - ox Sign in FILE REVIEW VIEW Wrap Text Merge & Center. I Sx Good AutoSum - A A Copy HOME INSERT PAGE LAYOUT FORMULAS DATA Xcut Calibri . 11 A == Format painter BIU S A = = Cipboard Font ! X fi -113000*90% Paste General $ % ) Number D Normal Conditional Format as Neutral Formatting Table Bad Calculation Check Cell insert Delete Format - Sort Find Filter - Select- Eating Alignment Styles Cells H I J N O P Q R S T U V W X Y Z DE F G Depreciation expense Berbal 13200 Endal 13,200 K L M Salaries & wages payable Beg.bal 60X6,000 d. end bal 606,000 rent expense beg bal 11300 11,200 End bal overhead applied - (39900/1050) 1100 - 418000 (change the figure if read incorrect due to figures being bit blurry) Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw materials inventory Add purchase of raw materials Total raw materials available less:Ending raw materials inventory Materials used in production Direct Labor Manufacturing overhead applied to work in process total manufacturing costs Add:Beginning work in process inventory 46,000 280,000 326,000 61,000 265,000 310,000 418000 993,000 37,000 1,030,000 100,000 930,000 112 113 114 less:Ending work in process inventory Cost of goods manufactured Sheet1 READY + 100€ . A 1035 AM # - Type here to search o wie exic A 4 ENG 213/2019

Froya Fabrikker .xlsx - Excel Product Activation Failed) ? FILE REVIEW - ox Sign in A VIEW Wrap Text Merge & Center. La Copy Good 1 x AutoSum - AY HOME INSERT PAGE LAYOUT FORMULAS DATA Xcut Calibri . 11 A == Format painter BIU S A = = Clipboard Font - X V fx -113000*90% General $ % Paste Bad Calculation D Normal Conditional Format as Neutral Formatting Table ) Check Cell insert Delete Format - Sort Find Filter - Select- Eating Alignment Number Styles Cells I J K L M N O P Q R S T U V W X Y Z F G H Schedule of Cost of goods sold Beginning finished Foods inventory Add:Cost of goods manufactured Cost of goods available for sale less:ending finished goods inventory Unadjusted cost of goods sold less overapplied overhead Adjusted cost of goods sold 76,000 930,000 1,006,000 46,000 960,000 5,500 954,500 2,000,000 954,500 1,045,500 Income statement Sales cost of goods sold Gross margin Selling and administrative expense Utilities expense Advertising expense Salaries expense Depreciation expense rent expense 15000 152,000 190,000 13,200 11300 22500 23000 111 381,500 661,000 Net operating income 142 143 Sheet1 HLADY + 100% Type here to search o wiege C A 10:35 AM ING 2/13/2019