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Question(s) / Instruction(s):

Almeda ducts, Inc., uses a job-order costing system. The company's inventory balances on April 1, the start of its fiscal year, were as follows:

  Raw materials                  $15,400 

  Work in process              $10,400 

  Finished goods                                $32,400 

During the year, the following transactions were completed:

a.            Raw materials were purchased on account, $200,000.

b.            Raw materials were issued from the storeroom for use in production, $190,500 (80% direct and 20% indirect).

c.             Employee salaries and wages were accrued as follows: direct labor, $72,000; indirect labor, $26,000; and selling and administrative salaries, $80,000.

d.            Utility costs were incurred in the factory, $41,000.

e.            Advertising costs were incurred, $49,000.

f.             Prepaid insurance expired during the year, $10,000 (90% related to factory operations, and 10% related to selling and administrative activities).

g.            Depreciation was recorded, $59,000 (85% related to factory assets, and 15% related to selling and administrative assets).

h.            Manufacturing overhead was applied to jobs at the rate of 175% of direct labor cost.

i.              Goods that cost $324,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.

j.             Sales for the year totaled $700,900 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $325,000.

Requirements:

1.            Prepare journal entries to record the transactions for the year.

2.            Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing Overhead, and Cost of Goods Sold. Post the appropriate parts of your journal entries to these T-accounts (don't forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account

3:

(a)          Is Manufacturing Overhead underapplied or overapplied for the year? (Input the amount as positive value.

(b)          Prepare a journal entry to close this balance to Cost of Goods Sold.

4.  Prepare an income statement for the year.

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