Question

Best Engine reconditions engines. Its job cost records yield the following information. Best Engine uses a perpetual inventory system Click to view the job order costing records information.) Read the requirements. Requirement 1. Compute Best Engine's cost of (a) Work in Process Inventory at May 31 and June 30, (b) Finished Goods Inventory at May 31 and June 30, and (c) Cost of Goods Sold for May and June Prepare the May schedule first. (Complete only necessary answer boxes. If a box is not used in the table leave the box empty; do not enter a zero.) Best Engine Computation of Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold For May and June Date (a) Work in Process Inventory (b) Finished Goods Inventory (c) Cost of Goods Sold Cost Cost Job Cost Job Job May 31 Total Total Total 1. Compute Best Engine's cost of (a) Work in Process Inventory at May 31 and June 30, (b) Finished Goods Inventory at May 31 and June 30, and (c) Cost of Goods Sold for May and June. 2. Make summary journal entries to record the transfer of completed jobs from Work in Process Inventory to Finished Goods Inventory for May and June. 3. Record the sale of Job 5 on account for $1,700. 4. Compute the gross profit for Job 5. What costs must the gross profit cover? Total Total Cost Manufacturing Date Cost Added of Job at Job Sold in June No. Started Finished May 31 5/9 1,200 4/26 5/13$ 4/3 5/12 1,100 5/29 5/31 6/3 $ 1,400 5/31 900 $ 4 800 6/12 6/8 6/14 600 6 6/23 1,300 7/6 7/9

Answer 1

Answer 1:

Best Engine Computation of Work in process inventory, Finished Goods inventory and Cost of Goods Sold For May and June Date alWork in process invento b) Finished Goods invento Cost of goods sold 1 $1,200 May. 31 $900 $1,400 4 $1,100 2 $900 $1,400 $2,300 Total 3 $1,400 $1,300 Jun. 30 4$1,700 $600 Total $1,300 $3,700

Answer 2:

Debit Credit Miay Finished Goods Inventory $2,300 Work in process inventory $2,300 (to record finished goods transferred) Finished Goods Inventory Work in process inventory $3,700 Jun $3,700 (to record finished goods transferred)

Answer 3:

DateAccount Title and explanation Debit Credit $1,700 $1,700 Sales Revenue (to record sale of Job 5) $600 Cost of Goods sold $600 Finished Goods Inventory (to record cost of goods sold)

Answer 4:

Gross profit = Sales - Cost of goods sold

Gross profit of Job 5 = 1700 - 600 = $1,100

Gross profit of Job 5 = $1,100

Gross profit should cover cost related production (of goods sold). These are direct material, direct labor, variable and fixed manufacturing overheads