Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, are given below.
Supreme Videos, Inc. Balance Sheet January 1 |
||||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 63,000 | ||||
Accounts receivable | 102,000 | |||||
Inventories: | ||||||
Raw materials (film, costumes) | $ | 30,000 | ||||
Videos in process | 45,000 | |||||
Finished videos awaiting sale | 81,000 | 156,000 | ||||
Prepaid insurance | 9,000 | |||||
Total current assets | 330,000 | |||||
Studio and equipment | 730,000 | |||||
Less accumulated depreciation | 210,000 | 520,000 | ||||
Total assets | $ | 850,000 | ||||
Liabilities and Stockholders' Equity | ||||||
Accounts payable | $ | 160,000 | ||||
Capital stock | $ | 420,000 | ||||
Retained earnings | 270,000 | 690,000 | ||||
Total liabilities and stockholders' equity | $ | 850,000 | ||||
Because the videos differ in length and in complexity of production, the company uses a job-order costing system to determine the cost of each video produced. Studio (manufacturing) overhead is charged to videos on the basis of camera-hours of activity. The company’s predetermined overhead rate for the year is based on a cost formula that estimated $280,000 in manufacturing overhead for an estimated allocation base of 7,000 camera-hours. The following transactions occurred during the year:
Direct labor (actors and directors) | $ | 82,000 |
Indirect labor (carpenters to build sets, costume designers, and so forth) |
$ | 110,000 |
Administrative salaries | $ | 95,000 |
Required:
1. Prepare a T-account for each account on the company’s balance sheet and enter the beginning balances.
2. Record the transactions directly into the T-accounts.
3. Is the Studio (manufacturing) Overhead account underapplied or overapplied for the year? By how much?
4. Prepare a schedule of cost of goods manufactured. If done correctly, the cost of goods manufactured from your schedule should agree with which of the above transactions?
5. Prepare a schedule of cost of goods sold. If done correctly, the unadjusted cost of goods sold from your schedule should agree with which of the above transactions?
6. Prepare an income statement for the year.
1,2) Preparing T accounts and recording entries
Cash Account
Debit | credit | |
Bal opn | 63000 | 785000 |
(I) | 850000 | |
Bal end | 128000 |
Raw material
Debit | credit | |
Bal | 30,000 | 200,000 |
(a) | 185000 | |
Bal end | 15,000 |
Videos in process
Debit | credit | |
Bal | 45000 | 550,000 |
(b) | 170,000 | |
(f) | 82000 | |
(I) | 290,000 | |
Bal | 37,000 | |
Studio and equipment
Debit | Credit | |
Bal | 730,000 |
Studio overhead
Debit | Credit | |
(b) | 30,000 | 290,000(280000/7000)*7250 |
(c) | 92,000 | |
(d) | 63,000 | |
(f) | 110,000 | |
(g) | 5600 | |
(n) | 9400 | bal 9400 |
Misc expense
(h) | 8600 |
Adm salary expense
(f) | 95000 |
Sales
(k) 925,000 |
COGS
(k) | 600000 | (n) 9400 |
Bal | 590,600 |
Retained earnings
Bal. 270,000 |
Accounts receivable
Bal | 102,000 | (I) 850,000 |
(k) | 925,000 | |
Bal | 177,000 |
Prepaid insurance
Bal opn | 9000 | (g) 7000 |
Bal cls | 2000 |
Finished goods
Bal | 81,000 | (k) 600,000 |
(j) | 550,000 | |
Bal cls | 31,000 |
Accumulated depreciation
Bal 210,000 | ||
(d) 84000 | ||
Bal cls 294,000 |
Depreciation
(d) | 21000 |
Insurance
(g) | 1400 |
Advertising
(e) | 130,000 |
Accounts payable
(m) 500,000 | bal | 160,000 |
(a) | 185000 | |
(c) | 72000 | |
(e) | 130000 | |
(f) | 8600 | |
Bal | 55,600 |
Salaries and wages
(m) 285000 | (f) 287000 | |
Bal 2000 |
Capital in stock
Bal | 420,000 |
3.MOH was over applied by $9400 for the year
4.schedule of COGM
Videos in process | 45,000 | |
Add manufacturing costs | ||
RM | 170,000 | |
DL | 82,000 | |
MOH Applied | 290,000 | 542,000 |
Total cost of videos in process | 587,000 | |
Less ending videos in process | (37,000) | |
COGM | 550,000 |
5. Schedule of COGS
Beg finished videos | 81,000 |
Add COGM | 550,000 |
Cost of videos available for sale | 631,000 |
Less end finished videos | (31,000) |
Unadjusted COGS | 600,000 |
Less MOH Overapplied | (9400) |
Adjusted COGS | 590600 |
6.income statement
Sales | 925,000 | |
COGS | (590,600) | |
Gross profit | 334,400 | |
Marketing & Adm expenses : | ||
Advertising | 130,000 | |
Salaries | 95000 | |
Insurance | 1400 | |
Depreciation | 21000 | |
Misc | 8600 | |
Total marketing &adm expenses | (256000) | |
Net operating income | 78,400 |
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $ 63,000 Accounts receivable 102,000 Inventories: Raw materials (film, costumes) $ 30,000 Videos in process 45,000 Finished videos awaiting sale 81,000 156,000 Prepaid insurance 9,000 Total current assets 330,000 Studio and equipment 730,000 Less accumulated depreciation 210,000 520,000 Total assets $ 850,000 Liabilities and Stockholders'...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $ 70,000 Accounts receivable 109,000 Inventories: Raw materials (film, costumes) $ 37,000 Videos in process 52,000 Finished videos awaiting sale 88,000 177,000 Prepaid insurance 10,400 Total current assets 366,400 Studio and equipment 744,000 Less accumulated depreciation 217,000 527,000 Total assets $ 893,400 Liabilities and Stockholders'...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $ 77,000 Accounts receivable 116,000 Inventories: Raw materials (film, costumes) $ 44,000 Videos in process 22,000 Finished videos awaiting sale 95,000 161,000 Prepaid insurance 11,800 Total current assets 365,800 Studio and equipment 758,000 Less accumulated depreciation 224,000 534,000 Total assets $ 899,800 Liabilities and Stockholders'...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $ 77,000 Accounts receivable 116,000 Inventories: Raw materials (film, costumes) $ 44,000 Videos in process 22,000 Finished videos awaiting sale 95,000 161,000 Prepaid insurance 11,800 Total current assets 365,800 Studio and equipment 758,000 Less accumulated depreciation 224,000 534,000 Total assets $ 899,800 Liabilities and Stockholders'...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $ 78,000 Accounts receivable 117,000 Inventories: Raw materials (film, costumes) $ 45,000 Videos in process 23,000 Finished videos awaiting sale 96,000 164,000 Prepaid insurance 12,000 Total current assets 371,000 Studio and equipment 760,000 Less accumulated depreciation 225,000 535,000 Total assets $ 906,000 Liabilities and Stockholders'...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, the beginning of its fiscal year, are given below: Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $82,000 Accounts receivable 121,000 Inventories: Raw materials (film, costumes) $49,000 Videos in process 22,000 Finished videos awaiting sale 100,000 171,000 Prepaid insurance 12,800 Total current assets 386,800 Studio...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1, are given below Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash S 63,000 Accounts receivable 102,000 Inventories: Raw materials (film, costumes) $ 30,000 Videos in process 45,000 Finished videos awaiting sale 81,000 156,000 Prepaid insurance 9,000 Total current assets 330,000 studio and equipment 730,000 Les accumulated depreciation 210.000 520,000 Total assets $850,000 Liabilities and stockholders Equity...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, are given below. Supreme Videos, Inc. Balance Sheet January 1 Assets Current assets: Cash $ 79,000 Accounts receivable 118,000 Inventories: Raw materials (film, costumes) $ 46,000 Videos in process 24,000 Finished videos awaiting sale 97,000 167,000 Prepaid insurance 12,200 Total current assets 376,200 Studio and equipment 762,000 Less accumulated depreciation 226,000 536,000 Total assets $ 912,200 Liabilities and Stockholders'...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company's balance sheet accounts as of January 1 are given below. $ 63,000 102.000 Supreme Videos, Ine. Balance Sheet January 1 Assets Current assets! Cash Accounts receivable Inventories: Raw materials (film, costumes) $ 30,000 Videos in process 45.000 Finished videos awaiting sale 81,000 Prepaid insurance Total current assets Studio and equipment 730.000 Less accumulated depreciation 210.000 Total assets Liabilities and Stockholders' Equity Mccounts payable Capital stock $420,000...
Supreme Videos, Inc., produces short musical videos for sale to retail outlets. The company’s balance sheet accounts as of January 1, the beginning of its fiscal year, are given below: Prepare a T-account for each account on the company’s balance sheet, and enter the beginning balances. Make an entry directly into the T-accounts for transactions (a) through (m). Supreme Videos, Inc. Balance Sheet January Assets Current assets: Cash Accounts receivable Inventories: Raw materials (film, costumes) Videos in process Finished videos...