Question

Please fill out the chart using the information below:

Thunderduck Custom Tables, Inc. Thunderduck Custom Tables, Inc. Income Statement uck Schedule of cost of goods manufactured For the month Ended December 31, 20xX Cost of goods sold For the month Ended December 31, 20xX For the month Ended December 31, 20xX Sales Revenue COGS Gross Margin Selling and Admin Salary Dep Advertising

Step 1	You work for Thunderduck Custom Tables Inc. This is the first month of operations. The company designs and manufactures specialty tables. Each table is specially customized for the customer. This month, you have been asked to develop and manufacture two new tables for customers. You will design and build the tables. This is a no nail, no screw, and no glue manufacturing ( no indirect materials used). You will be keeping track of the costs incurred to manufacture the tables using Job #1 Cost Sheet and Job #2 Cost Sheet.
	The cost of the direct materials that can be used to manufacture the table are as follows. These cost are on a per unit basis.
		Table Top	$2,900.00
		Table Leg	$1,100.00
		Drawer	$490.00
	The company uses a job order costing system and applies manufacturing overhead to jobs based on direct labor hours.
	The company estimates that there will be 12 direct labor hours worked during the month.
	The estimated manufacturing overhead cost for the month is:
	a.	Factory supervisor salary per month	$4,500.00
	b.	Rent for the factory per month	$1,500.00
	c.	Depreciation of factory equipment per month	$600.00
		Total Estimated manufacturing overhead	$6,600.00
	What is the predetermined manufacturing overhead rate?
Step 2	The first order you received was to manufacture a table using a table top and four legs. This is your Job #1.
Step 3	The customer that has ordered Job #2, wants a table that is the same as Job #1, but wants to also add a drawer to the table.
Step 4	The following is a list of transactions that need to be recorded for the company for activity in the month of December. Record those in the "General Journal" tab of the excel file using the proper format. Please use the following accounts: Accounts Receivables, Raw materials, Work in process, Finished goods, Accumulated depreciation, Accounts payable, Salaries and wages payable, Sales revenue, Manufacturing overhead, Cost of goods sold, Salaries and wages expense, Advertising expenses, and Depreciation expense.
1-Dec	Raw Materials purchased on account, $29,000.
5-Dec	All Raw Materials needed for Job #1 were requisitioned from the material storage for use during the month. Assume all materials are direct. (After you journalize this entry please enter the information into Job #1 Cost Sheet)
10-Dec	The following employee costs were incurred but not paid during the month:
	There are three assembly employees that spend 2 hours each, $35 per hour to make the table for Job #1. (After you journalize this entry please enter the information into Job #1 Cost Sheet)
	Salary for supervisor of the factory $5,000.
	Administrative Salary $2,000.
15-Dec	All Raw Materials needed for Job #2 were requisitioned from the material storage for use during the month. Assume all materials are direct. (After you journalize this entry please enter the information into Job #2 Cost Sheet)
16-Dec	Rent for the month of December for the factory building incurred but not paid $1,500.
17-Dec	Advertising costs incurred but not paid for the month was $1,400.
20-Dec	Depreciation for the month of December was recorded on equipment was $750 ($150 for equipment used in the factory and the remainder for equipment used in selling and administrative activities).
22-Dec	Manufacturing overhead cost was applied based on direct labor hours to Job #1 based on the POHR determined on the "Job Cost Sheet". (After you journalize this entry please enter the information into Job #1 Cost Sheet)
26-Dec	Job #1 was completed and transferred to Finished Goods during the month.
28-Dec	The completed table from Job #1 was sold on account to the customer for $34,000 during the month. (Hint: Make sure to account for the cost of the table that was sold using the cost from the job cost sheet.)
31-Dec	Direct labor cost incurred but not paid for three employees to start manufacturing Job #2. The employees only worked one hour each, three hours total, $35 per hour during the month and they did not complete their work on the job. (After you journalize this entry please enter the information into Job #2 Cost Sheet)
31-Dec	Manufacturing overhead cost was applied based on direct labor hours to Job #2 based on the POHR. Only three direct labor hours were worked on Job #2 during the month. (After you journalize this entry please enter the information into Job #2 Cost Sheet)
31-Dec	Any underapplied or overapplied overhead for the month was closed out to Cost of Goods Sold.
Step 5	Post the journal entries that you recorded on the "General Journal" tab to the "T-accounts" tab. This is the company's first month of business, so there will not be any beginning balances. Compute the balance for each T-account after all of the entries have been posted.
Step 6	Prepare a Schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold on the "Schedule of COGM and COGS" tab for Job #1 and Job #2 that were worked on during the month by the company. Make sure to follow the format noted in your book (pg. 87). (Hint: This is the company's first month of operations and therefore the beginning balances will be zero.)
Step 7	Prepare an Income Statement for the month using the Traditional Format on the "Income Statement" tab.

Journal Entries

Date	Particulars	Dr. Amount	Cr. Amount
Dec-01	Raw Materials	$29,000
	Accounts Payable		$29,000
Dec-05	Work in Process	$7,300
	Raw Materials		$7,300
Dec-10	Work in Process	$210
	Manufacturing Overhead	$5,000
	Salaries & Wages Expense	$2,000
	Salaries & Wages Payable		$7,210
Dec-15	Work in Process	$7,790
	Raw Materials		$7,790
Dec-16	Manufacturing Overhead	$1,500
	Accounts Payable		$1,500
Dec-17	Advertising Expenses	$1,400
	Accounts Payable		$1,400
Dec-20	Manufacturing Overhead	$150
	Depreciation expense	$600
	Accumulated depreciation		$750
Dec-22	Work in Process	$3,300
	Manufacturing Overhead		$3,300
Dec-26	Finished Goods	$10,810
	Work in Process		$10,810
Dec-28	Accounts Receivable	$34,000
	Sales Revenue		$34,000
Dec-28	Cost of Goods Sold	$10,810
	Finished Goods		$10,810
Dec-31	Work in Process	$105
	Salaries & Wages Payable		$105
Dec-31	Work in Process	$1,650
	Manufacturing Overhead		$1,650
Dec-31	Cost of Goods Sold	$5,700
	Manufacturing Overhead		$1,700
	Salaries & Wages Expense		$2,000
	Advertising Expenses		$1,400
	Depreciation expense		$600

Answer 1

Step 1 Determination of the predetermined Manufacturing overhead rate :-
	Predetermined Manufacturing Overhead Rate =	Total estimated manufacturing overhead cost	=	$6,600	=	$550	per direct labour hour
		Total estimated direct labor hours		12
Step 2 The first order you received was to manufacture a table using a table top and four legs. This is your Job #1 :-
Job #1 Cost Sheet
						Total
	Direct Materials
	Table Top	2,900
	Table Leg	1,100				4,000
	Direct Labor	2 hours* 3 employees= 6 hours *$35 per hour				210
	Manufacturing Overhead	$550* 6 hours				3,300
	Total					7,510
Step 3 The customer that has ordered Job #2, wants a table that is the same as Job #1, but wants to also add a drawer to the table. :-
Job #2 Cost Sheet
						Total
	Direct Materials
	Table Top	2,900
	Table Leg	1,100
	Drawer	490				4,490
	Direct Labor	1 hours* 3 employees= 3 hours *$35 per hour				105
	Manufacturing Overhead	$550* 3 hours				1,650
	Total					6,245
Step 4 Journal entries
Sr. No.	Particulars		L.F	Debit		Credit
1-Dec	Raw Materials A/c		Dr.	$29,000
	To Accounts payable A/c					$29,000
	(Being Raw materials purchased on account)
5-Dec	Work in Process A/c		Dr.	$     4,000
	To Raw Materials A/c					$4,000
	(Being Raw materials issued for use in Job #1)
10-Dec	Work in Process A/c      (2 hours* 3 employees*$35 per hour)		Dr.	210
	Manufacturing Overheads A/c                                                         Dr.			$5,000
	Selling & Administration Overheads A/c                                          Dr.			$2,000
	To Salaries and wages payable A/c					7,210
	(Being employee cost incurred)
15-Dec	Work in Process A/c		Dr.	$4,490
	To Raw Materials A/c					$4,490
	(Being Raw materials issued for use in Job #2)
16-Dec	Manufacturing Overheads A/c		Dr.	$1,500
	To Rent Payable A/c					$1,500
	(Being Rent for the factory building incurred )
17-Dec	Selling & Administration Overheads A/c		Dr.	$1,400
	To Advertising Expenses Payable A/c					$1,400
	(Being Advertising Expenses incurred)
20-Dec	Manufacturing Overheads A/c		Dr.	$150
	Selling & Administration Overheads A/c                                                  Dr.			$600
	To Accumulated depreciation A/c					$750
	(Being depreciation charged on factory and office equipments)
22-Dec	Work in Process A/c                                                                       Dr.			3,300
	To Manufacturing Overheads A/c					$3,300
	(Being Manufacturing Overheads charged to job #1 @ $550 per direct labour) (550 * 6)
26-Dec	Finished Goods A/c                                                                        Dr.			7,510
	To Work in Process A/c					$7,510
	(Being job #1 completed)
28-Dec	Cost of goods sold A/c                                                                   Dr.			$7,510
	To Finished Goods A/c					$7,510
	(Being goods sold transferred)
28-Dec	Account Receivable A/c                                                                                        Dr.			$34,000
	To Sales Revenue A/c					$34,000
	(Being goods sold on account)
31-Dec	Work in Process A/c     (1 hour* 3 employees*$35 per hour)    Dr.			$105
	To Salaries and wages payable A/c					$105
	(Being direct labor cost incurred)
31-Dec	Work in Process A/c                                                                     Dr.			$1,650
	To Manufacturing Overheads A/c					$1,650
	(Being Manufacturing Overheads charged to job #2 @ $550 per direct labour) (550 * 3)
31-Dec	Cost of goods sold A/c                                                                   Dr.			$     1,700
	To Manufacturing Overheads A/c					$1,700
	(Being underapplied overheads charged)

Step 5 I-Accounts Raw materials Alc To Balance bld By Work in Process 8,490 To Accounts payable Alc $ 29,000 By Balance dd 20,510 29.000 $29,000 Work In Proces To Balance bld By Finished Goods Alc 7,510 To Raw Materials $8,490 By Balance dd 6,245 c To Salaries and wages payable Alc To Manufacturing Overheads Alc 315 $4,950 $ 13.755 13.755 Finished Goods Ac To Balance bld 7,510 By Cost or goods sold C By Balance dd To Work in Process $7,510 $7.510 7,510 Manufacturing Overheads Alc $5,000 By Work in Process Alc 4.950 o Salaries and wages payable Atc To Rent Payable Ald To Accumulated depreciation $1,500 By Cost of Goods Sold Alc 1.700 150 c $6.650 6.650

Cost of Goods Sold Alc To Finished Goods Atc $7,510 By Sales Revenue A/c 9,210 To Manufacturing Overheads Alc $1.7010 $ 9.210 9.210 Manufacturing Overheads are underapplied for the month Actual manufacturing overheads incurred $6,650 Applied manufacturing overheads (2100 1050) $4,950 Underapplied overheads $1.700 Step 6 Schedule of Cost of Goods Manufactured Job #1 (Finished) Job #2 Unfinshed 4,000$ Direct material costs 4,490 a 210$ b Direct labor costs 105 1,650 c Manufacturing Overheads 3,300$ Cost of Unfinished jobs 6.245 7,510 Cost of Goods manufactured Schedule of Cost of Goods sold: Cost of Goods manufactured 7,510 1,700 b Underapplied overheads charged Cost of Goods sold 9.210 Step 7 Income Statement for the month Sales $34,000 Cost of Goods sold $9.210 $ 24.790 aross margin Selling & Admimistrative Ovrheads $4,000 Less Net operating income $ 20.790
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