Question

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

1. Purchased $18,000 of materials on account.

2. Issued $1,000 of supplies from the materials inventory.

3. Purchased $11,600 of materials on account.

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

5. Issued $14,000 in direct materials to the production department.

6. Incurred direct labor costs of $22,000, which were credited to Wages Payable.

7. Paid $21,600 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

8. Applied overhead on the basis of 135 percent of $22,000 direct labor costs.

9. Recognized depreciation on manufacturing property, plant, and equipment of $10,400.

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

	Beginning			Ending
Materials Inventory	$	30,240			?
Work-in-Process Inventory		7,000			?
Finished Goods Inventory		33,600		$	28,840
Cost of Goods Sold					53,280

Required:

a. Prepare journal entries to record the transactions

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

Answer 1

	TR	General Journal				Debit	Credit
	1)	Raw materials inventory				18,000
		Accounts payable					18,000
	2)	manufacturing overhead				1,000
		Raw materials inventory					1,000
	3)	Raw materials inventory				11,600
		Accounts payable					11,600
	4)	Accounts payable				18,000
		cash					18,000
	5)	work in process inventory				14,000
		Raw materials inventory					14,000
	6)	work in process inventory				22,000
		Wages payable					22,000
	7)	Manufacturing overhead				21,600
		Cash					21,600
	8)	work in process inventory				29700
		manufacturing overhead					29700
	9)	manufacturing overhead				10,400
		Accumulated depreciation					10,400

Materials inventory					Work in process inventory
Beg bal	30,240				Beg.Bal	7,000
1	18,000	1,000	2		5)	14,000	48,520	Finished goods
3	11,600	14,000	5		6)	22,000
					8)	29,700
End bak	44,840
					end bal	24,180
Manufacturing overhead control					Applied manufacturing overhead
Beg bal	0				Beg bal	0
2)	1,000						29,700	8)
7)	21,600
9)	10,400
End bal	33000				end bal		29,700
Accounts payable					Cash
Beg bal	0				beg bal	0
4)	18,000	18,000	1)				18,000	4)
		11,600	3)				21,600	7)
End bal		11,600			End bal		39,600
Wages payable					Accumulated dep=-PP&E
Beg bal	0				Beg bal	0
		22,000	6)				10,400	9)
End bal		22,000			End bal		10,400
Finished goods inventory					Cost of goods sold
Beg bal	33,600				beg bal	0
WIP	48,520	53,280			finished go	53,280
End bal	28,840				End bal	53,280