Question

Cost of Materials Issuances Under the FIFO Method An incomplete subsidiary ledger of materials inventory for May is as follows: a. Complete the materials issuances and balances for the materials subsidiary ledger under FIFO. Received Issued Balance Receiving Report Number Quantity Unit Price Materials Requisition Number Quantity Amount Date Quantity Unit price Amount May 1 240 $9 $2,160 26 170 $11 May 4 106 270 $ May 10 32 110 13 May 21 119 160 May 27 b. Determine the materials inventory balance at the end of May. $ Feedback b. Calculate the amount of each materials issue, using FIFO. In the Balance section, separate each different unit price and its quantity. c. Journalize the summary entry to transfer materials to work in process. Job Order Cost Accounting for a Service Business The law firm of Furlan and Benson accumulates costs associated with individual cases, using a job order cost system. The following transactions occurred during July: July 3. Charged 590 hours of professional (lawyer) time to the Obsidian Co. breech of contract suit to prepare for the trial, at a rate of $240 per hour. 10. Reimbursed travel costs to employees for depositions related to the Obsidian case, $17,400. 14. Charged 260 hours of professional time for the Obsidian trial at a rate of $300 per hour. 18. Received invoice from consultants Wadsley and Harden for $76,900 for expert testimony related to the Obsidian trial. 27. Applied office overhead at a rate of $75 per professional hour charged to the Obsidian case. 31. Paid administrative and support salaries of $45,300 for the month. 31. Used office supplies for the month, $15,300. 31. Paid professional salaries of $162,800 for the month. 31. Billed Obsidian $430,700 for successful defense of the case. a. Provide the journal entries for each of these transactions. July 3 July 10 July 14 July 18 July 27 July 31 Admin. sal. July 31 Supplies July 31 Prof. sal. July 31 Billed July 31 Cost b. How much office overhead is over- or underapplied? Enter your answer as a positive number. $ c. Determine the gross profit on the Obsidian case, assuming that over- or underapplied office overhead is closed monthly to cost of services. $ Financial Statements of a Manufacturing Firm The following events took place for Chi-Lite Inc. during June, the first month of operations as a producer of road bikes: • Purchased $533,000 of materials. • Used $458,400 of direct materials in production. • Incurred $396,000 of direct labor wages. • Applied factory overhead at a rate of 70% of direct labor cost. • Transferred $1,086,300 of work in process to finished goods. • Sold goods with a cost of $1,060,700. • Sold goods for $1,898,700. • Incurred $456,100 of selling expenses. • Incurred $169,700 of administrative expenses. a. Prepare the June income statement for Chi-Lite. Assume that Chi-Lite uses the perpetual inventory method. Chi-Lite Inc. Income Statement For the Month Ended June 30 $ $ Selling and Administrative Expenses: $ Total Selling and Administrative Expenses $ b. Determine the inventory balances at the end of the first month of operations. Materials inventory, June 30 $ Work in process inventory, June 30 $ Finished goods inventory, June 30 $

Answer 1

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Part a.
RECEIVED			ISSUED			BALANCE
Receiving			Materials
Report		Unit	Requisition					Unit
Number	Quantity	Price	Number	Quantity	Rate	Date	Quantity	Price	Amount
						May 1	240	$ 9.00	$2,160.00
26	170	$         11.00				May 4	240	$ 9.00	$2,160.00
							170	$11.00	$1,870.00
			106	240	$    9.00	May 10	140	$11.00	$1,540.00
				30	$ 11.00
32	110	$         13.00				May 21	140	$11.00	$1,540.00
							110	$13.00	$1,430.00
			119	140	$ 11.00	May 27	90	$13.00	$1,170.00
				20	$       13
Part b.
Number	Quantity	Rate	Amount
106	240	$           9.00	$            2,160
	30	$         11.00	$               330
Total for First Issue			$            2,490
119	140	$         11.00	$            1,540
	20	$              13	$               260
Total for First Issue			$            1,800
Part c.
Accounts	Debit	Credit
Work in Process Inventory	$                    4,290
Material Inventory		$         4,290