Question

Curtis Products manufactures garden tools. It uses a job costing system that allocates factory overhead on the basis of direct labor-costs. Budgeted factory overhead for the year 2019 was $558,000, and management budgeted $372,000 in direct labor costs. The company’s tax rate is 21% (Round income tax to the nearest dollar).\

The trial balance of Curtis Products, Inc. on June 30, 2019 is as follows:
   Cash……………………………………………… $21,000
   Accounts Receivable……………………………..   65,000
   Finished Goods………………………………….. 103,000
   Work in Process………………………………….   31,000
   Materials ………………………………………… 19,000                  
Prepaid factory Insurance.....……………………… 6,000
   Machinery and Equipment (cost)………………   264,000
   Accumulated Depreciation………………………                                $70,000
   Accounts Payable………………………………..                                  99,000
   Common Stock…………………………………….                             200,000
   Retained Earnings………………………………                                 140,000
   Total …………………………………………   $509,000                $509,000
During July, the following transactions took place:

July 1. Purchased raw materials for $45,000 and factory supplies for $3,000 on account. (Record
            materials and supplies in the materials control account)
        2. Received a $50,000 loan from First National Bank to be repaid in 5 years.
       3. Declared a $1,500 cash dividend.  

       3. Issued raw materials to production, $52,000
       5. Paid factory utility bill, $10,230 in cash.
    15. Received a bill for July’s janitorial services, $4,500. This amount has not yet been paid.

      16. Used factory supplies costing $1,000. (Indirect manufacturing cost).
      20. Incurred research & development expense on account, $6,000.
     22. Paid other factory overhead costs, $12,500.
      23. Incurred selling expenses on account, $6,150.
      28. Paid cash dividend, $1,500.
     25. Incurred payroll costs of $45,000 (not yet paid). Of this amount, $30,000 were direct labor costs
             and $15,000 indirect labor cost.
      27. Incurred restructuring costs totaling $15,000 on account.

     27. Incurred administrative expenses on account, 7,100.
     28. Prepaid factory insurance expired, $1,750.
      28. Paid payroll costs, $45,000.
      30. Record depreciation for July. Depreciation rate is 10% per annum on the cost of machinery and equipment.
             One-fifth of this depreciation is for office equipment and the remainder for factory equipment.
      30. Allocate manufacturing overhead costs to production on the basis of direct labor costs.
      31. Completed and transferred goods with a total cost of $95,000 to the finished goods storeroom.
      31. Sold goods costing $185,000 for $374,000. (Assume all sales were made on account).
     31. Paid accounts payable totaling, $158,000
      31. Collected accounts receivable in the amount of $320,000.
      31. Accrue $400 interest expense.
      31.   Calculate the overallocated or underallocated overhead and close this amount to the Cost of Goods Sold account.

Required
1. Compute the company’s factory overhead allocation rate for the year.
2. Prepare journal entries to record July transactions. Explanations are not required. If needed round
    numbers to the nearest dollar. Skip a line after each completed journal entry.
3. Post the journal entries to the appropriate general ledger accounts.
4. Prepare a trial balance for July 2019.
6. Prepare a multiple-step income statement and a classified balance sheet for July 2019.

Answer 1

Please hit LIKE button if this helped. For any further explanation, please put your query in comment, will get back to you. Curtis Part 1 $558,000/$372,000 150.00% of DL Cost Part 4 Part 2 Event Account Debit Credit Beginning Debit Credit $ 21,000 $ 65,000 $ 103,000 $ 19,000 $ 31,000 $ 6,000 For the period Debit Credit $ 142,770 $ 54,000 $ 90,000 $ 4,000 $ 32,000 $ 1,750 $ 1,000 Jul 1 $ 48,000 Material control Account Accounts Payable $ 48,000 Jul 2 Cash $ 50,000 Bank Loan $ 50,000 $ 264,000 $ 2,200 $ $ 70,000 150,000 Jul 3 $ 1,500 Dividend Dividend Payable S 1,500 $ 50,000 Jul 3 $ 52,000 Work in process control account Material control account $ $ $ $ Accounts Cash Accounts Receivable Finished goods inventory Material control Account Work in process control account Prepad Insurance Factory Supplies Machinery and Equipment Accumulated Depreciation Bond Payable Bank Loan Additional Paid in capital Common Stock Retained Earning Accounts Payable Interest Payable Income Tax Payable Dividend Sales Revenue Cost of Goods Sold Depreciation Expense-Office Admin Expense Selling Expense Restructuring cost Research and Development Expense Interest Expense Income Tax Expense Total 110,000 50,000 60,000 69,000 Closing Debit Credit $ 163,770 $ 119,000 $ 13,000 $ 15,000 $ 63,000 $ 4,250 $ 1,000 $ 264,000 $ 72,200 $ 150,000 $ 50,000 $ 110,000 $ 50,000 $ 60,000 $ 2,250 $ 400 $ 31,956 $ 1,500 $ 374,000 $ 186,740 $ 440 $ 7,100 $ 6,150 $ 15,000 $ 6,000 $ 400 $ 31,956 $ 899,556 $ 899,556 $ 52,000 $ 71,250 Jul 5 $ 10,230 Factory Overheads Cash $ 400 $ 31,956 $ 10,230 $ 1,500 Jul 15 $ 4,500 $ 374,000 Factory Overheads Accounts Payable $ 4,500 Jul 16 $ 1,000 Factory Overheads Factory Supplies $ 1,000 $ 186,740 $ 440 $ 7,100 $ 6,150 $ 15,000 $ 6,000 $ 400 $ 31,956 509,000 $ 555,306 Jul 20 $ 6,000 Research and Development Expense Accounts Payable $ 6,000 Jul 22 $ 12,500 $ 509,000 $ $ 555,306 Factory Overheads Cash $ 12,500 Jul 23 $ 6,150 $ 374,000 Selling Expense Accounts Payable $ 6,150 $ $ (186,740) 187,260 Jul 28 $ 1,500 Dividend Payable Cash $ 1,500 Jul 25 Work in process control account Factory Overheads Factory Payroll $ $ 30,000 15,000 Part 5 Income Statement: Sales Revenue Less: Cost of Goods Sold Gross Profit Less: Operating Expense Depreciation Expense-Office Admin Expense Selling Expense Restructuring cost Research and Development Expense Operating Income Interest Expense Income before tax Income Tax Expense 21% Net Income S $ $ $ $ 440 7,100 6,150 15,000 6,000 $ 45,000 Jul 27 $ 15,000 Restructuring cost Accounts Payable $ 15,000 $ $ S $ $ $ (34,690) 152,570 (400) 152,170 31,956) 120,214 Jul 27 $ 7,100 Admin Expense Accounts Payable $ 7,100 Jul 28 $ 1,750 Factory Overheads Prepad Insurance $ 1,750

Jul 28 $ 45,000 Factory Payroll Cash $ 45,000 Jul 30 Depreciation Expense-Office Factory Overheads Accumulated Depreciation $ $ 440 1,760 $ 2,200 Jul 30 $ 45,000 Work in process control account Factory Overheads ($30,000*150%) $ 45,000 Jul 31 $ 95,000 Finished goods inventory Work in process control account $ 95,000 Jul 31 $ 185,000 Cost of Goods Sold Finished goods inventory $ 185,000 Jul 31 $ 374,000 Accounts Receivable Sales Revenue $ 374,000 Jul 31 $ 158,000 Accounts Payable Cash $ 158,000 Jul 31 $ 320,000 Cash Accounts Receivable $ 320,000 Jul 31 $ 400 Interest Expense Interest Payable $ 400 Jul 31 $ 1,740 Cost of goods sold Factory Overheads $46,740 Actual-$45,000 Applied=$1,740 under applied $ 1,740 Jul 31 $ 31,956 Income Tax Expense Income Tax Payable $ 31,956

General Ledger: Account Accounts Payable Date Debit Beginning 7/1/2019 7/15/2019 7/20/2019 7/23/2019 7/27/2019 7/27/2019 7/31/2019 $ 158,000 Credit Balance $ 99,000 $ $ 48,000 $ $ 4,500 $ $ 6,000 $ $ 6,150 $ $ 15,000 $ $ 7,100 $ 99,000 147,000 151,500 157,500 163,650 178,650 185,750 27,750 Accounts Receivable Beginning $ 7/31/2019 $ 65,000 374,000 65,000 439,000 119,000 $ 320,000 $ Admin Expense 7/27/2019 $ 7,100 7,100 Cash 21,000 50,000 Beginning $ 7/2/2019 $ 7/5/2019 7/22/2019 7/28/2019 7/28/2019 7/31/2019 7/31/2019 $ $ 10,230 $ 12,500 $ 1,500 $ 45,000 $ 158,000 $ $ $ $ $ 21,000 71,000 60,770 48,270 46,770 1,770 (156,230) 163,770 320,000 Cost of Goods Sold 7/31/2019 $ 7/31/2019 $ 185,000 1,740 185,000 186,740 Depreciation Expense-Office 7/30/2019 $ 440 440 Dividend 7/3/2019 $ 1,500 1,500 Dividend Payable $ 1,500 $ 1,500 7/3/2019 7/28/2019 $ 1,500 Factory Overheads 7/5/2019 $ 7/15/2019 $ 7/16/2019 $ 7/22/2019 $ 7/25/2019 $ 7/28/2019 $ 7/30/2019 $ 7/30/2019 7/31/2019 10,230 4,500 1,000 12,500 15,000 1,750 1,760 10,230 14,730 15,730 28,230 43,230 44,980 46,740 1,740 $ $ 45,000 $ 1,740 $ Factory Payroll $ 45,000 $ 45,000 7/25/2019 7/28/2019 $ 45,000 Finished goods inventory Beginning $ 7/31/2019 $ 103,000 95,000 103,000 198,000 13,000 $ 185,000 $

Income Tax Expense 7/31/2019 $ 31,956 31,956 Interest Expense 7/31/2019 $ 400 400 Material control Account Beginning $ 7/1/2019 $ 7/3/2019 19,000 48,000 19,000 67,000 15,000 $ 52,000 $ Research and Development Expense 7/20/2019 $ 6,000 6,000 Restructuring cost 7/27/2019 $ 15,000 15,000 Selling Expense 7/23/2019 $ 6,150 6,150 Work in process control account Beginning $ 7/3/2019 $ 7/25/2019 $ 7/30/2019 $ 7/31/2019 31,000 52,000 30,000 45,000 31,000 83,000 113,000 158,000 63,000 $ 95,000 $ Bank Loan 7/2/2019 $ 50,000 $ 50,000 Factory Supplies 7/16/2019 $ 1,000 $ 1,000 Prepad Insurance $ 6,000 Beginning 7/28/2019 $ 1,750 $ 6,000 4,250 Accumulated Depreciation Beginning 7/30/2019 $ 70,000 $ 2,200 $ $ 70,000 72,200 Sales Revenue 7/31/2019 $ 374,000 $ 374,000 Interest Payable 7/31/2019 $ 400 $ 400 Income Tax Payable 7/31/2019 $ 31,956 $ 31,956