Question

PROBLEM ONE Wright Furniture assembles custom furniture. Manufacturing overhead is allocated at a rate of $3 per machine hours. Note that in this problem DM & Supplies Inventory is maintained in the Raw Materials stockroom. Supplies when issued from the stockroom are Indirect Materials. The following information is available: Raw materials 1/1/19 $ 15 Materials & supplies purchased* Work in process 1/1/19 5 Direct labor* Finished goods 1/1/19 10 President's salary* Direct materials used* 145 Factory supplies used* Depreciation on plant* 19 Indirect factory labor used* Utilities on the factory * 13 Utilities on showroom floor* Sales** $475 Finished goods 12/31/19 Raw materials 12/31/19 ??? Work in process 12/31/19 Salesperson salary* 25 Property taxes, administration bldg.* Manufacturing overhead allocated, 21 actual machine hours* ?? $175 100 36 10 32 35 8 17 5 REQUIRED: Prepare the journal entries for the above information (15 journal entries – each "*"' requires an entry as well as the entry for the Cost of Good Manufactured). This problem does not require a balance sheet so credits in certain JE's can be made to Cash or A/P or Wages Payable Show the journal entry to close the over-or-under applied overhead to cost of goods. Prepare a cost of goods manufactured statement in good form. Prepare a cost of goods sold statement in good form. Prepare an income statement in good form.

Answer 1

Credit Debit $175 $175 $145 $145 $10 $10 $100 $1001 $32 $32) $191 $19 $13 $13 Date Account Titles and Explanations 1) Material Inventory Accounts payable (To record purchase of material) 2) Work in process Inventory Material Inventory (To record material issued to production) 3) Manufacturing overhead account Material Inventory (To record factory supplies issued) Work in process Inventory Wages payable (To record direct labor) 5) Manufacturing overhead account Wages payable (To record indirect labor) 6) Manufacturing overhead Accumulated depreciation - Plant (To record depreciation) 7) Manufacturing overhead Accounts payable (To record factory utilities) 8) Administrative expenses Cash (To record president salary) 9) Selling expenses Cash (To record sales person salary) 10) Selling expenses Accounts payable (To record utilities on showroom) 11) Administrative expenses Accounts payable (To record property taxes on admin building) 12) Finished Goods Inventory Work in process Inventory (To record completion of FG) 13) Accounts receivable Sales (To record sales on account) 14) Cost of goods sold Finished Goods Inventory (To record cost of goods sold) $361 $36 $25 $25 $35 $35 $5 $5 $254 $254 $475 $475 $256 $256 15) $53 Cost of goods sold Manufacturing overhead (To record under-applied overheads to COGS) $53

$5 Wright Furniture Statement of Cost of Goods Manufactured For the Year Ended 2019 Work in process inventory, Beginning Direct materials: Materials inventory, Beginning $15 Purchases $175 Cost of materials available for use $190 Less: Indirect material used (factory supplies) $10 $180 Less materials inventory, Ending $35 Cost of direct materials used Direct labor Manufacturing overhead applied Total manufacturing costs incurred Total manufacturing costs Less work in process inventory, Ending Cost of goods manufactured $145 $100 $21 $266 $271 $17 $254 Wright Furniture Schedule of Cost of Goods Sold Beginning Finished goods inventory Add: Cost of goods manufactured Cost of goods available for sale Ending Finished goods inventory Cost of goods sold $10 $254 $264 $8 $256 Actual manufacturing overheads Deprecation on plant Utilities on factory Factory supplies used Indirect factory labor Actual manufacturing overheads $19 $13 $10 $32 $74 Manufacturing overhead applied Under-applied manufacturing overheads $21 $53 Cost of goods sold Under-applied manufacturing overheads Adjusted Cost of goods sold $256 $53 $309 $475 $309 $166 Wright Furniture Income Statement For The Year Ended 2019 Sales Less: Cost of goods sold Gross profit Less: Operating expenses Selling and administrative expenses Sales person salary President salary Utilities on showroom floor Property taxes, administration buildings Total operating expenses Net Income from Operations $25 $36 $35 $5 $101 $65