Question

p17-32A

Mighry Sear Property, Puns, and Prepare tril balanc a June 30, 30 edgor cturing transaction 0 chapter 17 ting rning objectives 2, 3,4,5 P17-32A Prepa 4 COGM 547,430 Operating income 518,95o trial balance on June t Stars h. Account Title 160, 6,000 40,000 400 220,000 Raw Materials 20. Work-in-Process Finished Goods s 75,000 134,000 2,600 139,000 109,800 Property, Mant, and Equipment Accumulated Depreciation Accounts Payable Wages Payable Common Stock Retained Earnings Sales Revenue Cost of Goods Sold Manufacturing Overheacd Selling and Administrative Expenses Totals $ 460,400 460,400 June 1 balances in the subsidiary ledgers were as follows: Raw Materials Inventory subsidliary ledger: Paper, $4,000, indirect materials, $2,000 ventory subsidiary ledger:Job 120,$40,000,Job 121,50 . Work-in-Process In Finished Goods Inventory subsidiary ledger: Large Stars, $9,900, Small Stars, $10,500 June transactions are summarized as follows: a. Collections on account, $145,000 b. Selling and administrative expenses incurred and paid, $32,000. c. Payments on account, $39,000 d. Materials purchases on account: Paper, $24,000, indirect materials, $4,200. e. Materials requisitioned and used in production: Job 120: Paper, $950 Job 121: Paper. $7.900 f. Wages incurred during June, $39,000. Labor time records for the month: Job 120, $3,600; Job 121, $17,000; indirect labor, $18,400. g Wages paid in June include the balance in Wages Payable at May 31 plus $36,100 of wages incurred during June. h. Depreciation on plant and equipment, $2,500. i. Manufacturing overhead allocated at the predetermined overhead allocation rate of 80% of direct labor costs. Jobs completed during the month: Job 120 with 700,000 Large Stars at a total cost j. of $47,430. k. Sales on account: all of Job 120 for $104,000. 1. Adjusted for overallocated or underallocated manufacturing overhead. Requirements 1. Journalize the transactions for the company 2. Open T-accounts for the general ledger, the Raw Materials Inventory subsidiary . ledger, the Work-in-Process Inventory subsidiary ledger, and the Finished Goods Inventory subsidiary ledger. Insert each account balance as given, and use the ref- crence Bal. Post the journal entries to the T-accounts using the transaction letters as a reterence 3. Prepare a trial balance at June 30, 2018. 4. Use the Work-in-Process Inventory T-account to prepare a schedule of cost of goods manufactured for the month of June 5. Prepare an income statement for the month of June. Using job order costing in a service company P17-33A Bluchird Resign, Inc. is a Web site design and consulting firm. The firm uses a job

Answer 1

1. Journalizing Transactions for the Company

a.) Collections on account , $ 1,45,000 :

Bank / Cash Account Dr. $ 1,45,000

To Accounts Receivable A/c. $ 1,45,000

(Being Collections received from Accounts Receivable)

b.) Selling & Administrative Expenses incurred and paid, $ 32,000

Selling & Administrative Expense Account Dr. $ 32,000

To Bank / Cash A/c. $ 32,000

(Being Selling & Administrative expenses paid off)

c.) Payments on Account, $ 39,000

Accounts Payable Account Dr. $ 39,000

To Bank / Cash A/c. $ 39,000

(Being Accounts Payable paid off to the extent of $ 39,000)

d.) Materials Purchased on Account : Paper, $ 24,000; Indirect Materials, $ 4,200

Material Purchase Account Dr. $ 28,200

To Accounts Payable Account $ 28,200

(Being Material (Raw Material & Indirect Material Purchased on Credit (On Account))

f.) (i) Wages Payable Account Dr. $ 2,600

To Bank / Cash A/c. $ 2,600

(Being Wages Payable as on May 31, 2018 of $ 2,600 paid off)

(ii) Wages Account Dr. $ 39,000

To Bank / Cash A/c. $ 36,100

To Wages Payable A/c. $ 2,900

(Being Wages of $ 36,100 out of the total Wages of $ 39,000 for the month of June 2018 paid off and the balance of $ 2,900 remaining unpaid transferred to Wages Payable Account)

h.) Depreciation on Plant & Equipment, $ 2,500

Manufacturing Overhead Account Dr. $ 2,500

To Accumulated Depreciation A/c. $ 2,500

(Being Depreciation of $ 2,500 charged on Plant & Equipment)through Accumulated Depreciation Account)

2. Open T-accounts for the General Ledger

Raw Material Inventory Subsidiary Ledger

Particulars	Amount ($)	Particulars	Amount ($)
To Opening Balance:		By
Paper	4,000
Indirect Materials	2,000
Total	6,000

Work In Progress Inventory Subsidiary Ledger

Particulars	Amount ($)	Particulars	Amount ($)
To Opening Balance:		By
Job 120	40,000
Job 121	0
Total	40,000

Finished Goods Inventory Subsidiary Ledger

Particulars	Amount ($)	Particulars	Amount ($)
To Opening Balance:		By
Large Stars	9,900
Small Stars	10,500
Total	20,400

3. Prepare Trial Balance at June 30, 2018

(Amount in $)

Particulars	Debit	Credit
Cash	49,300
Accounts Receivable	1,19,000
Inventories : Raw Material	25,350
Work In Progress	40,000
Finished Goods	20,400
Property Plant & Equipment	2,20,000
Accumulated Depreciation		77,500
Accounts Payable		1,23,200
Wages Payable		2,900
Common Stock		1,39,000
Retained Earnings		1,06,880
Sales Revenue		1,04,000
Cost of Goods Sold
Manufacturing Overhead	47,430
Selling & Administrative Expenses	32,000
Totals	5,53,480	5,53,480

4. Prepare Schedule of Cost of Goods Manufactured for the month of June

Cost of Goods Manufactured can be calculated as below :

Particulars	Amount ($)
Raw Material Inventory Account :
Opening Inventory	6,000
Add : Purchase of Raw Material Inventory (24,000 + 4,200)	28,200
Less : Closing Inventory (6,000 + 28,200 - 950 - 7,900 = 25,350)	25,350
Consumption of Raw Material	8,850
Wages Incurred for the month	39,000
Depreciation	2,500
Manufacturing Overhead	24,570
TOTAL COST OF GOODS MANUFACTURED	74,920

5. Income Statement for the month of June 2018

Particulars	Amount ($)
Manufacturing Overheads
Raw Material Consumed	8,850
Wages	39,000
Depreciation	2,500
Manufacturing Overhead	24,570
TOTAL COST OF GOODS MANUFACTURES	74,920
Add : Selling & Administrative Expense	32,000
TOTAL EXPENSES --- (A)	1,06,920
SALES ---- (B)	1,04,000
REVENUE / (LOSS) --- (B-A)	(2,920)