Question

Gilkison Corporation uses a job-order costing system to assign manufacturing costs to jobs. At the end of the month it closes out any overapplied or underapplied manufacturing overhead to Cost of Goods Sold. Its balance sheet on October 1 appears below:

Gilkison Corporation Balance Sheet October 1
Assets:
Cash				$	10,700
Raw materials	$	4,700
Work in process		15,700
Finished goods		19,700			40,100
Property, plant, and equipment (net)					229,700
Total assets				$	280,500
Liabilities and Stockholders' Equity:
Accounts payable				$	15,350
Retained earnings					265,150
Total liabilities and stockholders' equity				$	280,500

Summaries of the transactions completed during October appear below:

(1)	Raw materials purchased on account	$	66,700
(2)	Raw materials used in production (direct materials)	$	50,700
(3)	Raw materials used in production (indirect materials)	$	7,350
(4)	Direct labor paid in cash	$	95,700
(5)	Indirect labor paid in cash	$	25,700
(6)	Selling and administrative salaries paid in cash	$	30,700
(7)	Factory utility costs (on account)	$	12,700
(8)	Depreciation on PP&E--manufacturing equipment	$	10,700
(9)	Depreciation on PP&E--selling and administration	$	2,350
(10)	Advertising expenses paid in cash	$	15,700
(11)	Manufacturing overhead applied to production	$	59,100
(12)	Cost of goods manufactured	$	196,700
(13)	Cash sales	$	283,000
(14)	Cost of goods sold	$	205,700
(15)	Cash payments to creditors	$	81,700
(16)	Overapplied (underapplied) overhead		?

Required:

a. Complete the spreadsheet below.

b. Prepare a Schedule of Cost of Goods Sold for the company for October.

c. Prepare an Income Statement for the company for October.

Complete this question by entering your answers in the table below. Required A Required B Required C Complete the spreadsheet below. (Negative or Deductible amounts should be entered with a minus sign.) Accounts Retained Payable Raw Work in Finished Manufacturing Overhead Transactions PP&E (net) Cash Materials Process Goods Eamings Beginning balances, October 1 (1) Raw materals purchased on account (2) Raw materials used in production (direct materials) (3) Raw materials used in production (indirect materials) (4) Direct labor paid in cash (5) Indirect labor paid in cash (6) Selling and administrative salaries paid in cash (7) Factory uilily costs (on account) (8) Depreciation on PP&E-manufacturing equipment (9) Depreciation on PP&E-selling and administration (10 Advertising expenses paid in cash (11) Manufacturing overhead applied to production (12) Cost of goods manufactured (13) Cash sales (14)Cost of goods sold (15) Cash payments to creditors (16) Overapplied (underapplied) overhead Ending balances at October 31 Roquired A Required B

Answer 1

		Cash	Raw material	Work In process	Finished Goods	Manufactiring overhead	PP & E	Accounts payable	Retained Earnings
	Beg Bal	10700	4700	15700	19700
-1	Raw materials purchased on account		66,700					66,700
-2	Raw materials used in production (direct materials)		-50,700	50,700
-3	Raw materials used in production (indirect materials)		-7,350			7,350
-4	Direct labor paid in cash	-95,700		95,700
-5	Indirect labor paid in cash	-25,700				25,700
-6	Selling and administrative salaries paid in cash	-30,700							-30,700
-7	Factory utility costs (on account)	12,700				12700		12700
-8	Depreciation on PP&E--manufacturing equipment					10,700	-10,700
-9	Depreciation on PP&E--selling and administration						-2350		-2350
-10	Advertising expenses paid in cash	-15700							-15700
-11	Manufacturing overhead applied to production			59100		-59100
-12	Cost of goods manufactured			-196,700	196,700
-13	Cash sales	283,000							283000
-14	Cost of goods sold				-205,700				-205,700
-15	Cash payments to creditors	-81,700						-81,700
-16	Overapplied (underapplied) overhead					2650
	Total	56900	13350	24500	10700	0	-13050	-2300	28550
	Schedule of Cost of Goods Sold for the company for October.
	Beginning balance	19700
	Add: Cost of goods manufactured	196,700
		216400
	Less: Ending balance	10700
	Unadjusted Cost of good sold	205700
	Less: Overapplied overhead	-2650
	Adjusted Cost of good sold	203050
	Income Statement
	Sales		283000
	Less: Cost of good sold		203050
	Gross profit		79950
	Less: Seliing & administrative expenses
	Selling and administrative salaries expenses	30,700
	Depreciation on PP&E--selling and administration	2350
	Advertising expenses paid in cash	15700	48,750
	Net Income		31,200