1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don’t…
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Question “1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don’t…”
1. Prepare journal entries to record the preceding
transactions.
2. Post your entries to T-accounts. (Don’t forget to enter the
beginning inventory balances above.)
3. Prepare a schedule of cost of goods manufactured.
4A. Prepare a journal entry to close any balance in the
Manufacturing Overhead account to Cost of Goods Sold.
4B. Prepare a schedule of cost of goods sold.
5. Prepare an income statement for the year.
Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor- hours. Its predetermined overhead rate was based on a cost formula that estimated $395,600 of manufacturing overhead for an estimated allocation base of 920 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $290,000. b. Raw materials used in production (all direct materials), $275,000. c. Utility bills incurred on account, $77,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (970 hours) Indirect labor Selling and administrative salaries $ 320,000 $ 108,000 $ 200,000 e. Maintenance costs incurred on account in the factory, $72,000 f. Advertising costs incurred on account, $154,000. g. Depreciation was recorded for the year. $90,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $115,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). i. Manufacturing overhead cost was applied to jobs, $_?__ j. Cost of goods manufactured for the year, $950,000. k. Sales for the year (all on account) totaled $2,100,000. These goods cost $980,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were:
Raw Materials Work in Process Finished Goods $ 48,000 $ 39,000 $ 78,000 Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don’t forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year.
Req 1 Req 2 Req3 Req 4A Req 4B Req 5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select “No journal entry required” in the first account field.) View transaction list Journal entry worksheet 2 3 4 5 6 7 8 ….. 12 The raw materials were purchased for use in production, $290,000 on account. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal
Req 1 Req 2 Req 3 Req 4A Req 4B Req 5 Post your entries to T-accounts. (Don’t forget to enter the beginning inventory balances above.) Accounts Receivable Sales Beg. Bal. Beg. Bal. End. Bal. End. Bal. Raw Materials Cost of Goods Sold Beg. Bal. Beg. Bal. End. Bal. End. Bal. Work in Process Manufacturing Overhead Beg. Bal. Beg. Bal. End. Bal. End. Bal.
Prepare a schedule of cost of goods manufactured. Froya Fabrikker A/S Schedule of Cost of Goods Manufactured Direct materials: Total raw materials available Materials used in production Total manufacturing costs Cost of goods manufactured < < Req2 R Req 4A >
View transaction list Journal entry worksheet Record the entry to close any balance in the manufacturing overhead account to cost of goods sold. Note: Enter debits before credits. Transacti General Journal Debit Credit Record entry Clear entry View general journal
Prepare a schedule of cost of goods sold. Froya Fabrikker A/S Schedule of Cost of Goods Sold < Req 4A Req5 >
Req 1 Req 2 Req3 Req 4A Req 4B Reg 5 Prepare an income statement for the year. er AS Froya Fabrikker A/S Income Statement For the Year Ended Selling and administrative expenses: Req 4B Req5 )
Answer
Answer-
Predetermined overhead rate =$395,600 /920 direct labor-hours=
$430
1. Journal entries
No.
Account Titles and Explanation
Debit
Credit
a
Raw Material Inventory
290,000
Accounts Payable
290,000
b
Work in Process Inventory
275,000
Raw Material Inventory
275,000
c
Manufacturing Overhead
69,300
Utility Expenses
7,700
Accounts Payable
77,000
d
Work in Process Inventory
320,000
Manufacturing Overhead
108,000
Salaries Expenses
200,000
Wages Payable
628,000
e
Manufacturing Overhead
72,000
Accounts Payable
72,000
f
Advertisement Expenses
154,000
Accounts Payable
154,000
g
Manufacturing Overhead
67,500
Depreciation Expenses
22,500
Accumulated Depreciation
90,000
h)
Manufacturing Overhead
92,000
Rent Expenses
23,000
Accounts Payable
115,000
i
Work in Process Inventory ($430*970 hrs)
417,100
Manufacturing Overhead
417,100
J
Finished Good Inventory
950,000
Work in Process Inventory
950,000
k
Accounts Receivable
2,100,000
Sale
2,100,000
(To record the sale )
Cost of Good Sold
980,000
Finished Good Inventory
980,000
(To record the cost of the sale)
2. Posting to T-accounts
Raw Material Inventory
Work in process Inventory
Accounts Payable
Beg
48,000
275,000
b
Beg
39,000
950,000
j
290,000
a
a
290,000
b
275,000
77,000
c
338,000
275,000
d
320,000
72,000
e
Bal
63,000
i
417,100
154,000
f
115,000
h
Finished Good Inventory
1,051,100
950,000
Beg
78,000
980,000
k
Bal
101,100
708,000
j
950,000
Manufacturing Overhead
1,028,000
980,000
c
69,300
417,100
i
Bal
48,000
d
108,000
Cost of Good Sold
e
72,000
k
980,000
Utility Expenses
g
67,500
c
7,700
h
92,000
980,000
408,800
417,100
7,700
8,300
Bal
Wages Payable
628,000
d
Advertisement Expenses
Salaries Expenses
f
154,000
d
200,000
628,000
154,000
200,000
Accumulated Depreciation
90,000
g
Rent Expenses
Depreciation Expenses
h
23,000
g
22,500
90,000
23,000
22,500
Sale
2,100,000
k
Account receivable
k
2,100,000
2,100,000
2,100,000
3. Schedule of cost of goods manufactured
Direct Material
Raw Material Inventory:Beginning
48,000
Add: Purchases of Raw Material
290,000
Raw Material Available
338,000
Deduct: Raw Material Inventory: Ending
63,000
Raw Material Used in production
275,000
Direct Labor
320,000
Manufacturing Overhead applied to Work in
process
417,100
Total Manufacturing Cost
1,012,100
Add:Beginning Work in process Inventory
39,000
1,051,100
Deduct: Ending Work in process Inventory
101,100
Cost of Good Manufactured
950,000
4.Journal Entry
Account Titles and Explanation
Debit
Credit
Manufacturing Overhead
8,300
Cost of Good Sold
8,300
The schedules of cost of goods sold
Finished Goods Inventory Beginning
78,000
Add: Cost of Good Manufactured
950,000
Cost of Goods Available for sale
1,028,000
Deduct: Finished Goods Inventory Ending
48,000
Unadjusted Cost of Good Sold
980,000
Less: Overapplied Overhead
8,300
Adjusted Cost of Good Sold
971,700
5.
The Income Statement
Sales
2,100,000
Cost of Good sold
971,700
Gross Margin
1,128,300
Selling and Administrative Expenses
Utility Expenses
7,700
Advertisement Expenses
154,000
Salary Expenses
200,000
Depreciation Expenses
22,500
Rent Expenses
23,000
407,200
Net Income
721,100
Conclusion
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