Question

CHAPTER 2 GROUP A PROBLEMS a Connect PA24 Recording Manufacturing and Nonmanufacturing Costs, Preparing the Cost of Goods Manufactured Report and Income Statement Lamonda Corp. uses a job order cost system. On April 1, the accounts had the following balances. LO 2-3 Raw Materials Inventory Work in Process Inventory Finished Goods Inventary Bal. 25.000 Bal. 55.000 Bal. 60.000 Manufacturing Overhead Cost of Goods Sold Sales Revenue Nonmanufacturing Expenses The following transactions occurred during April: a. Purchased materials on account at a cost of $136.000. b. Requisitioned materials at a cost of S122.000, of which $28,000 was for general factory use. c. Recorded factory labor of S155.000, of which $24,000 was indirect. d. Incurred other costs: Selling expense Factory utilities Administrative expenses Factory rent Factory depreciation $44,000 26,000 15.000 30,000 24,000 e. Applied overhead at a rate equal to 135 percent of direct labor cost. f Completed jobs costing $375,000. 8. Sold jobs costing S402.000. h. Recorded sales revenue of $500,000. Required: 1. Post the April transactions to the T-accounts. (Note: Some transactions will affect other accounts not shown; e.g., Cash, Accounts Payable, Accumulated Depreciation. You do not need to show the offsetting debit or credit to those accounts.) Compute the balance in the accounts at the end of April. Compute over or underapplied manufacturing overhead. If the balance in the Manufacturing Overhead account is closed directly to Cost of Goods Sold, will Cost of Goods Sold increase or decrease? 4. Prepare Lamonda's cost of goods manufactured report for April. 5. Prepare Lamonda's April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over- or underapplied manufacturing overhead.

Answer 1

Lamonda Corp 1&2.Post the April transaction to the T-accounts and compute the balance in the accounts at the end of April Raw Materials Inventory Work in process inventory Bal 25000 b Bal 55000 f 375000 136000 131000 176850 81850 Bal 39000 Bal Finished goods Inventory Manufacturing Ovhd Bal 60000 g 375000 33000 402000 176850 28000 e 24000 26000 Bal 24000 Cost of goods sold 132000 176850 402000 Bal 402000 Sales Revenue Non Manufacturing Expenses Bal Bal 59000 3.Compute over- or underapplied manufacturing overhead Manufacturing overhead 176850 132000 44850

4.Prepare Lamonda's cost of goods manufactured report for April Cost of Goods Manufactured Report For the Month of April Beginning raw materials inventory Add: Raw material purchases Less: Indirect materials Less: Ending raw materials inventory Direct materials used Direct labor Manufacturing overhead applied Total current manufacturing costs Add: Beginning work in process inventory Less: Ending work in process inventory Cost of goods manufactured 25000 136000 28000 39000 94000 131000 176850 401850 55000 81850 375000 5.Prepare Lamonda's April income statement. Include any adjustment to Cost of Goods Sold needed to dispose of over- or underapplied manufacturing overhead Income Statement For the Month of April Sales revenue Cost of goods sold Beginning finished goods inventory Add: Cost of goods manufactured Less: Ending finished goods inventory Unadjusted cost of goods sold Less: Overerapplied manufacturing overhead Gross profit Selling and administrative expenses Net income from operations 500000 60000 375000 33000 402000 -44850 357150 59000 298150