(L. OBJ. 2, 3, 4) Comprehensive accounting for manufacturing transactions [90—120 min]...

(L. OBJ. 2, 3, 4) Comprehensive accounting for manufacturing transactions [90—120 min]

Sneeches’ Stars produces stars for elementary teachers to reward their students. Sneeches’ Stars’ trial balance on April 1 follows:

April 1 balances in the subsidiary ledgers were as follows:

• Materials subledger; Paper, $4,800; indirect materials, $500

• Work in progress subledger: Job 120, $41,300

• Finished goods subledger: Large Stars, $9,300; Small Stars, $12,000 April transactions are summarized as follows:

Requirements

1. Open T-accounts for the general ledger; the Materials ledger; the Work in process ledger, and the Finished goods ledger Insert each account balance as given, and use the reference Bal.

2. Record the April transactions directly in the accounts, using the letters as references. Sneeches uses a perpetual inventory system.

3. Prepare a trial balance at April 30.

4. Use the Work in process T-account to prepare a schedule of cost of goods manufactured for the month of April. (You may want to review Exhibit 15-10.)

5. Prepare an income statement for the month of April. To calculate cost of goods sold, you may want to review Exhibit 15-7. (Hint: In transaction I you closed any under/over allocated manufacturing overhead to Cost of goods sold. In the income statement, show this correction as an adjustment to Cost of goods sold. If manufacturing overhead is unclerallocated, the adjustment will increase Cost of goods sold. If overhead is overallocated, the adjustment will decrease Cost of goods sold.)