Question

blankenship company’s ledger contained the followinh account balances on june 1, 19x1:

NAME: Blankenship Company's ledger contained the following account balances on June 1, 19X1: Raw Materials Inventory Work in Process Inventory Finished Goods Inventory $25,600 18,200 21,640 June transactions: a. Purchased materials on account, $30,200 b. Materials requisitioned to production as follows: direct, $26,400; indirect, $4,800 c. Factory wages totaled $34,000, deductions were made as follows: FICA-OASDI, 6.2%; FICA-HIP, 1.45%; federal income taxes, 20% group health insurance, $569 (All wages were subject to OASDI.) d. Labor charged to production: direct, $24,900; indirect, $9,200 e. Paid for repairs, $300 f. Recorded depreciation as follows: building, $850; equipment, $630 Recorded employer payroll taxes on June wages: FICA-OASDI, 6, 2%; FICA-HIP, 1.45% FUTA, 0.8%; SUTA, 2.7% h. Factory insurance expired, $195 i. Accrued property taxes, $225 j. Paid for various factory overhead cost, $1,200 k. Factory overhead applied to production at 80% of direct labor cost I. Cost of jobs completed during the months, $71,300 m. Goods costing $65,400 to manufacture were sold on account for $81,750 B- Required: I. Open general ledger accounts for Raw Materials Inventory 121, Work in Process Inventory 122, Finished Goods Inventory 123, Sales 411, Cost of Goods Sold 415, Factory Payroll Clearing 500, and Factory Overhead Control, 511. 2. Enter the balances of the manufacturing accounts given at the beginning of the problem. 3. Record Blankenship's June transactions. 4. Post to selected accounts opened in number 1 5. Prepare a statement of cost of goods manufactured. 6. Prepare a schedule of factory overhead costs 7. Prepare an income statement for the month, assuming selling expenses of $12,400, general expenses of $11,800, and an income tax rate of 34%.

Answer 1

Answer

l entries to record the transactions Transaction General Journal Debit Credit raw Material 30,200 Accounts Payable 30,200 raw materials purchased Work in 26,400 Manufacturing Overhead 4,800 Raw Material 31,200 raw materials issued to Factory wa 34,000 FICA security tax payable 2,108 FICA medical tax payable 493 Federal Income taxes payable 6,800 Group Health Insurance 569 ble Factory wages P 24,030 Work-in Process 24,900 Manufacturing Overhead 9,200 34,100 Factory wages Salaries and wages incurre Manufacturing Overhead Repiar costs incurre Payroll Tax Expense 3,791 FICA Social Security Taxes Payable-Em r Share 2,108 FICA Medicare Taxes Payable--Em r Share 493 272 FUTA Taxes Payable SUTA Taxes Payable 918 h & J Manufacturing Overhead 1,395 Prepaid Insuarance 230 Cash 1,165 Pro taxes 225 taxes Payable Pro 225 Manufacturing Overhead 630 reciation expense 850 Accumulated Deprecia tion 1,480 reciation recorded) Work-in Process 19,920 Manufacturing Overhead 19,920 overhead applied 80% of DLC Finished Goods 71,300 Work in 71,300 transferred to the finished Accounts Receivable 81,750 m1 Sales 81,750 Sales for the vear Cost of Goods Sold m2 65,400 Finished Goods 65,400 total cost to ce the s that were sold

1. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above T-Accounts Raw Materials Invento $31,200 Beg Bal 25,600b 30,200 End Balance 24,600 Work in Process Invento $71,300 Beg Bal 18,200 I 26,400 24,900 19,920 Balance 18,120 Manufacturing Overhead $ 19,920 4,800 k 9,200 300 h & J 1,395 630 Balance 3,595 Finished Goods Invento Beg Bal 21,640 71,300 m2 65,400 Balance 27,540 b) Computation of the cost of goods sold Cost of Goods Sold m2 65,400 Bal 65,400

Over applied overhead 3,595 Allocation of over Revised Cost Of applied Overhead goods sold Cost of Goods Sold 3,595 65,400 61,805 Debit Credit Manufacturing Overhead 3,595 Cost of Goods Sold 3,595

Schedule of Cost of goods manufactured Direct materials Raw materials inventory, Openin 25,600 30.200 Add: Purchases of raw materials 55,800 Raw materials available for use Deduct: Raw materials inventorv, Closin 24,600 Less: Indirect Material 4,800 Raw materials used in production 26,400 Direct labor 24,900 Manufacturing overhead applied 19,920 71,220 Total manufacturing costs 18,200 Add: Work in process inventorv. Openin 89,420 Deduct: Work in process inventory, Endin 18,120 $71,300 Cost of goods manufactured 4. Prepare a schedule of cost of goods sold Cost of goods sold Cost of goods sold Finished goods inventory. Beginnin 21,640 71300 Add: Cost of goods manufactured Goods available for sale 92,940 Deduct: Finished goods inventory, Endin 27,540 Unadjusted Cost of Goods Sold 65,400 Less: Over applied Overheads -3,595 Adiusted Cost of Goods Sold 61,805 Income Statement $81,750 Sales Cost of goods sold 61,805 19,945 Gross marein Selling expenses 12400 11800 General expenses Pro 225 taxes Depreciation expense 850 Net Operating income 5,330