Question

Bergamo Bay's computer system generated the following trial balance on December 31, 2017. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Payroll Payable) has not been recorded. Debit Credit Cash $ 62,000 Accounts receivable 36,000 Raw materials inventory 23,000 Work in process inventory 0 Finished goods inventory 12,000 Prepaid rent 4,000 Accounts payable $ 8,900 Notes payable 11,900 Common stock 40,000 Retained earnings 93,000 Sales 166,200 Cost of goods sold 106,000 Factory overhead 33,000 Operating expenses 44,000 Totals $ 320,000 $ 320,000 After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date. Materials requisition 21-3010: $ 4,700 direct materials to Job 402 Materials requisition 21-3011: $ 7,200 direct materials to Job 404 Materials requisition 21-3012: $ 1,700 indirect materials Labor time ticket 6052: $ 6,000 direct labor to Job 402 Labor time ticket 6053: $ 13,000 direct labor to Job 404 Labor time ticket 6054: $ 1,000 indirect labor Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 100% of direct labor cost. 3. Prepare a revised trial balance.

Answer 1

Bergamo Bay's Journal Enteries Date Debit in $ Credit in $ Particulars a. Direct materials costs to Work in Process Invento Work - in Process a/c Dr. 11900 To Raw materials 11900 b. Direct labor costs to Work in Process Invento Work - in Process a/c Dr. 19000 To Wages Payable 19000 c. Overhead costs to Work in Process Invento Workin Process ac Dr. 19000 To Overhead 19000 Record OH applied, 100% of DL d. Indirect materials costs to the Factory Overhead account Overhead a/c 1700 To Raw materials 1700 Indirect materials used added to OH e. Indirect labor costs to the Factory Overhead account Overhead a/c 1000 To Wages payable 1000 Accrued indirect labor Cost of goods sold a/c Dr. To Overhead 16700 16700

Factory Overhead Particulars Balance Balance Trial Balance As at Particulars Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Wages payable Notes payable Common stock Retained earnings Sales Cost of goods sold Factory overhead Operating expenses Totals Debit in $ Credit in$ Debit in 33000 14000 15700 16700 Credit in $ 33000 Debit in $ Credit in $ 62000 36000 9400 49900 Indirect Mat. Indirect Lab 1700 1000 $16,700 Under applied OH 4000 Adjustments WIP 8900 Direct material Direct Labour Overhead Total Job 402 4700 6000 6000 16700 Job 404 7200 13000 13000 33200 Total 11900 19000 19000 49900 11900 93000 166200 122700 Raw Materials Bal Additional used Addtl.Indirect mat 0 23000 -11900 1700 9400 Wages Payable Addtl.Indirect Lab 19000 COGS 106000 16700 122700 1000 underapplied