Question

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm.

1. Purchased $17,000 of materials on account.

2. Issued $900 of supplies from the materials inventory.

3. Purchased $11,400 of materials on account.

4. Paid for the materials purchased in transaction (1) using cash.

5. Issued $13,800 in direct materials to the production department.

6. Incurred direct labor costs of $21,000, which were credited to Wages Payable.

7. Paid $21,400 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

8. Applied overhead on the basis of 125 percent of $21,000 direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $10,200.

The following balances appeared in the accounts of Steve’s Cabinets for April.

	Beginning			Ending
Materials Inventory	$	29,940			?
Work-in-Process Inventory		6,800			?
Finished Goods Inventory		33,400		$	28,740
Cost of Goods Sold					52,980

Required:

a. Prepare journal entries to record the transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Answer 1

ANSWER

As per the given question,

General Journal Debit Credit Raw materials inventory 17,000 Accounts payable 17,000 manufacturing overhead 900 Raw materials inventory Raw materials inventory 11,400 Accounts payable 11,400

Accounts payable 17,000 cash 17,000 work in process inventory 13,800 Raw materials inventory 13,800 6) work in process inventory 21,000 Wages payable 21,000 Manufacturing overhead 21,400 Cash 21,400

work in process inventory 26250 manufacturing overhead 26250 9) manufacturing overhead 10,200 Accumulated depreciation 10,200

Materials inventory Beg bal 29,940 17,000 11,400 900 Work in process inventory Beg.Bal 6,800 5) 13,800 48,320 21,000 26,250 Finished goods 13,800 End bak 43,640 19,530

Manufacturing overhead control Applied manufacturing overhead Beg bal Beg balo 2) 900 26,2508) 21,400 10,200 End bal 32500 end bal 26,250

Accounts payable Cash Beg bal beg bal 0 17,000 17,000 1) 17,000 4) 11,400 3) 21,4007) End bal 11,400 End bal 38,400

Wages payable Beg bal Accumulated dep=-PP&E Beg bal 10,2009) 21,000 6) End bal 21,000 End bal 10,200 Cost of goods sold Finished goods inventory Beg bal 33,400 48,320 52,980 beg bal finished go WIP 52,980 End bal 28,740 End bal 52,980

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