Question

Saved Problem 3-15 (Static) 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 $360,000 of manufacturing overhead for an estimated allocation base of 900 direct labor-hours. The following transactions took place during the year. a. Raw materials purchased on account, $200,000 b. Raw materials used in production (all direct materials). S185,000. c Utility bills incurred on account, $70,000 (90% related to factory operations, and the remainder rela activities) d. Accrued salary and wage costs: to selling and administrative Direct Labor (975 hours) Indirect labor Selling and administrative salaries $ 230,000 $ 90,000 $ 110,000 e. Maintenance costs incurred on account in the factory, $54,000 Advertising costs incurred on account, $136.000 9 Depreciation was recorded for the year. $95.000 (80% related to factory equipment, and the remainder related to selling and administrative equipment) h. Rental cost incurred on account, $120,000 (85% related to factory facilities, and the remainder related to selling and administrative facilities) Manufacturing overhead cost was applied to jobs. S_? Cost of goods manufactured for the year, $770,000 k. Sales for the year (all on account totaled $1200,000. These goods cost $800.000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Materials Work in Process Finished Goods $ 30,000 5 21.000 $ 60,000 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)

Answer 1

Credit Sales Requirement (1) No Transaction General Journal 1 (a) Raw Materials Accounts Payable Debit $ 200,000 Requirement (2) Accounts Receivable Beg Bal. $ 1,200,000 Beg Bal. $ 200,000 $ 1,200,000 (k) 2 (b) $ 185,000 End Bal Work in process Raw Materials $ 1,200,000 End Bal. $ 1,200,000 $ 185,000 3 (c) Manufacturing overhead Utilities Expense Accounts Payable $ $ 63,000 7,000 Raw Materials Beg Bal. $ 30,000 (a) $ 200,000 $185,000 (b) Cost of goods sold Beg Bal. $ (k) $ 800,000 $ 70,000 4 (d) $ 230,000 90,000 110,000 End Bal. $ 45,000 Work in process Manufacturing overhead Salaries Expense Salaries and wages payable End Bal. $ 800,000 $ 430,000 Manufacturing Overhead 5 (e) $ Manufacturing overhead Accounts payable 54,000 Beg Bal. (b) (d) 0 Work In Process $ 21,000 $ 185,000 $770,000 6) $ 230,000 $ 390,000 $ 54,000 Beg Bal. (c) (d) (e) (9) $ 63,000 $ 390,000 $ 90,000 $ 54,000 $ 76,000 $ 102,000 6 () $ 136,000 Advertising Expense Accounts payable $ 136,000 $ 56,000 7 (g) $ 5,000 Manufacturing overhead Depreciation Expense Accumulated Depreciation 76,000 19,000 $ $ 95,000 Advertising Expense Finished Goods Beg Bal. $ 60,000 6) $ 770,000 $800,000 (k) Beg Bal. 8 h) $ 136,000 Manufacturing overhead Rent Expense Accounts Payable $ $ 102,000 18,000 $ 120,000 End Bal. $ 30,000 End Bal. $136,000 9 0 $ 390,000 Utilities Expense Work in process Manufacturing overhead Accumulated Depreciation $ 95,000 (9) $ 390,000 Beg Bal Beg Bal c) $ 7,000 10 6) $ Finished goods Work in process 770,000 $ 770,000 End Bal. $ 95,000 End Bal. 7,000 11 (k1) $ 1,200,000 Accounts Receivable Sales Accounts Payable Salaries Expense $ 1,200,000 Beg Bal. Beg Bal. (d) $ 110,000 12 (K2) $ Cost of goods sold Finished goods 800,000 $ 800,000 $ 200,000 (a) $ 70,000 (c) $ 54,000 (e) $ 136,000 (1) $ 120,000 (h) End Bal. $ 110,000 Salaries and Wages Payable End Bal. $ 580,000 Beg Bal. $ 430,000 (d) Depreciation Expense $ 430,000 Beg Bal. (9) $ 19,000 Rent Expense End Bal. $ 19,000 Beg Bal. $ 18,000 End Bal $ 18,000

Requirement 4a) No Transaction General Journal Debt Credit 1 Manufacturing Overhead $5,000 Cost of goods sold $5,000 Requirement (3) Froya Fabrikker A/S Schedule of cost of goods manufactured Direct materials: Raw materials inventory, Beginning $ 30,000 Add : Purchase of Raw materials $ 200,000 Materials available for use $ 230,000 Less : Raw materials inventory, Ending $ 45,000 Materials used in production Direct labour Manufacturing overhead applied to work in process Total manufacturing overhead Add : Work in process, Beginning Requirement (5) Froya Fabrikker Als Income Statement For the Year Ended Sales Cost of goods sold Gross Margin Seling and administrative expense Utities Expense $ 7,000 Advertising Expense $ 136,000 Salaries Expense $110,000 Depreciation Expense $ 19,000 Rent Expense $ 18,000 Total Seling and administrative expense $1,200,000 $ 795,000 $ 405,000 $ 185,000 $ 230,000 $ 390,000 $805,000 $ 21,000 $ 826,000 $ 56,000 $770,000 $ 290,000 Less : Work in process, Ending Cost of goods manufactured Net Income $ 115,000 Requirement 46) Froya Fabrikker A/S Schedule of cost of goods sold Finished goods inventory, Beginning Add: Cost of goods manufactured Goods avalable for sale Less : Fnished goods inventory, Ending Unadjusted cost of goods sold Less; Overappled overhead Adjusted Cost of goods sold $ 60,000 $ 770,000 $830,000 $ 30,000 $ 800,000 $ 5,000 $ 795,000