Question

Shapiro Corporation has provided the following data for the most recent month:

Raw Materials, beginning balance	$13,000
Work in process, beginning balance	$29,000
Finished Goods, beginning balance	$50,000
Transactions:
1.   Purchase raw materials	$64,000
2.   Raw materials used in production-all direct	$69,000
3.   Direct labor	$57,000
4.   Manufacturing overhead costs incurred--actual	$85,000
5.   Manufacturing overhead costs applied--allocated	$87,000
6.   Cost of units completed and transferred to finished goods.	$216,000
7.   Goods costing $262,000 were sold on account for $350,000
8.   Under or overapplied MOH is closed to cost of goods sold	?
9.   Advertising costs	$20,000
10. Administrative costs	$10,000

Required (CLEARY LABEL AND SHOW YOUR WORK):

1. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing Overhead, and Cost of Goods Sold. Record the beginning balances and each of the transactions (Label them 1-8) listed above.

2. Use the information from the table and part 1 to prepare an income statement in good form.

Answer 1

Answer

1 RAW MATERIAL Amount Particulars To beginning balance Amount Particulars $13,000 By transferred to Work in process $64,000 By ending balance $69,000 $8,000 To purchases $77,000 $77,000 WORK IN PROCESS Particulars Amount Amount Particulars $29,000 By transferred to $69,000 Finished Goods $57,000 $87,000 By ending balance To beginning balance To Raw Material To Direct Labour To Manufacturing overhead $216,000 $26,000 $242,000 $242,000 FINISHED GOODS Amount Particulars To beginning balance To transferred from Work in Process Amount Particulars $50,000 By transferred to Cost of Goods Sold $216,000 By ending balance $262,000 $4,000 $266,000 $266,000 MANUFACTURING OVERHEAD Amount Particulars To overhead incurred Amount Particulars $85,000 By overhead applied to Work in Process $87,000 To overapplied transferred to Cost of goods sold $2,000 $87,000 $87,000

COST OF GOODS SOLD Particulars Amount Particulars Amount $2,000 To Transferred from Finished Goods To advertising cost To administrative cost By overapplied overheads $262,000 $20,000 $10,000 By Cost of Sales $290,000 $292,000 $292,000 2 INCOME STATEMENT SALES $350,000 $260,000 LESS: COST OF GOODS SOLD ($262000-$2000) (After adjusting overapplied overheads) GROSS MARGIN $90,000 LESS : OPERATING EXPENSES - ADVERTISING COST - ADMINISTRATIVE COST $20,000 $10,000 NET INCOME $60,000