CHYS 1F90 Lecture Notes - Lecture 12: Historylink, Meritocracy, Cultural Capital
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Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.
Each knitter has a knitting machine that is used about 2/3 of the knitterâs time, the rest of the knitterâs time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.
The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.
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1. | Review the data in the Predetermined Factory Overhead Rate panel, and compute the predetermined factory overhead rate for POGP Company. | ||||||||||||
2. | On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition panel.
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3. | On December 15, review the source documents on the Time Tickets panel.
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4. | On December 21, Job 62 is completed. Review the Job Cost Sheets panel and your journal entries. Journalize the entry to move the associated costs to the Finished Goods account.* | ||||||||||||
5. | On December 22, 75 of the 100 sweaters from Job 62 are sold on account for $125 each. Journalize the following transactions*:
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6. | On December 31, the last work day of the year for the knitters, review the source documents on the Time Tickets panel.
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7. | On December 31, journalize the following transactions*. Note that expenses (B), (C), and (D) were paid in cash.
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8. | On December 31, prepare the journal entry to dispose of the balance in the Factory Overhead account.* | ||||||||||||
9. | What are the balances in the following accounts as of December 31?
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CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||
POGP Company | |||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||
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POGP Company
UNADJUSTED TRIAL BALANCE
November 30, 20Y8
ACCOUNT TITLE | DEBIT | CREDIT | |
---|---|---|---|
1 | Cash | 20,000.00 | |
2 | Accounts Receivable | 1,000.00 | |
3 | Supplies | 200.00 | |
4 | Materials | 5,000.00 | |
5 | Work in Process | 5,404.00 | |
6 | Equipment | 12,000.00 | |
7 | Accumulated Depreciation-Equipment | 825.00 | |
8 | Accounts Payable | 150.00 | |
9 | Common Stock | 10,000.00 | |
10 | Retained Earnings | 12,000.00 | |
11 | Dividends | 18,096.00 | |
12 | Sales | 307,500.00 | |
13 | Cost of Goods Sold | 255,040.00 | |
14 | Factory Overhead | 15.00 | |
15 | Wages Expense | 13,750.00 | |
16 | Totals | 330,490.00 | 330,490.00 |
Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).
Estimated Selected Amounts for the Year | |
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Estimated depreciation on equipment | $1,200.00 |
Estimated total Office Manager/Knitting Supervisor wages | $30,000.00 |
Estimated office utilities | $6,000.00 |
Estimated factory utilities | $4,800.00 |
Estimated factory rent | $18,000.00 |
Activity Base Data | |
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Estimated number of DLH for the year | 5,000 |
Estimated number of MH for the year | 3,500 |
Calculate the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.
Materials Requisition | Date: Dec. 10 | ||
Req. No. 12255 | Job No. 83 | ||
Description | Qty. Issued | Unit Price | Amount |
Yarn type B | 700 skeins | $5.00 | $3,500 |
Total issued | $3,500 |
Time Ticket | No. 1255 | Name: | Susan Blake | |
Work Description: | Knitting/piecing | |||
Dates | Job No. | Hours Worked | Unit Price | Amount |
12/01-12/15 | 62 | 65 | $15.00 | $975.00 |
12/16-12/31 | 83 | 103 | $15.00 | $1,545.00 |
Total Cost | $2,520.00 |
Time Ticket | No. 2274 | Name: | Josh Porter | |
Work Description: | Knitting/piecing | |||
Dates | Job No. | Hours Worked | Unit Price | Amount |
12/01-12/15 | 62 | 75 | $15.00 | $1,125.00 |
12/16-12/31 | 83 | 88 | $15.00 | $1,320.00 |
Total Cost | $2,445.00 |
Time Ticket | No. 3923 | Name: | Mary Jones | |
Work Description: | Knitting/piecing | |||
Dates | Job No. | Hours Worked | Unit Price | Amount |
12/01-12/15 | 62 | 60 | $15.00 | $900.00 |
12/16-12/31 | 83 | 109 | $15.00 | $1,635.00 |
Total Cost | $2,535.00 |
Add the amounts in requirements 2(B), 3(C), and 6(C) to the appropriate areas of the following job cost sheets. If there is no amount or an amount is zero, enter "0". If required, round your answers to the nearest cent.
Job 62 | 100 units: | Sweaters | ||
Direct Materials | Direct Labor | Factory Overhead | Total | |
Balance Dec. 1 | $5,000 | $300 | $104 | $5,404 |
Dec. 15 | ||||
Total Cost | ||||
Unit Cost |
Job 83 | 200 units: | Sweater vests | ||
Direct Materials | Direct Labor | Factory Overhead | Total Job Cost | |
Balance Dec. 1 | $0 | $0 | $0 | $0 |
Dec. 10 | ||||
Dec. 31 | ||||
Total Cost |
Journalize the entries in requirements 2 - 8. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 15
JOURNAL
ACCOUNTING EQUATION
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What are the balances in the following accounts as of December 31?
Materials | |
Work in Process | |
Finished Goods | |
Factory Overhead | |
Cost of Goods Sold | |
Tax Return Problem Beth R. Jordan lives at 2322 Skyview Road, Mesa, AZ 85201. She is a tax accountant with Mesa Manufacturing Company, 1203 Western Avenue, Mesa, AZ 85201 (employer identification number 11-1111111). She also writes computer software programs for tax practitioners and has a part-time tax practice. Beth is single and has no dependents. Beth was born on July 4, 1972, and her Social Security number is 123-45-6789. She wants to contribute $3 to the Presidential Election Campaign Fund.
The following information is shown on Beth's 2015 Wage and Tax Statement (Form Wâ2).
Line | Description | Amount |
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1 | Wages, tips, other compensation | $65,000.00 |
2 | Federal income tax withheld | 10,500.00 |
3 | Social Security wages | 65,000.00 |
4 | Social Security tax withheld | 4,030.00 |
5 | Medicare wages and tips | 65,000.00 |
6 | Medicare tax withheld | 942.50 |
15 | State | Arizona |
16 | State wages, tips, etc. | 65,000.00 |
17 | State income tax withheld | 1,650.00 |
Other 2015 transactions include the following.
Beth received interest of $1,300 from Arizona Federal Savings and Loan and $400 from Arizona State Bank. Each financial institution reported the interest income on a Form 1099âINT. She received qualified dividends of $800 from Blue Corporation, $750 from Green Corporation, and $650 from Orange Corporation. Each corporation reported Beth's dividend payments on a Form 1099âDIV.
Beth received a $1,100 income tax refund from the state of Arizona on April 29, 2015. On her 2014 Federal income tax return, she reported total itemized deductions of $8,200, which included $2,200 of state income tax withheld by her employer.
Fees earned from her part-time tax practice totaled $3,800. She paid $600 to have the tax returns processed by a computerized tax return service.
On February 8, Beth bought 500 shares of Gray Corporation common stock for $17.60 a share. On September 12, Beth sold the stock for $14 a share.
Beth bought a used sport utility vehicle for $6,000 on June 5. She purchased the vehicle from her brother-in-law, who was unemployed and was in need of cash. On November 2, she sold the vehicle to a friend for $6,500.
On January 2, Beth acquired 100 shares of Blue Corporation common stock for $30 a share. She sold the stock on December 19 for $55 a share.
Beth records revenues of $16,000 from the sale of a software program she developed. Beth incurred the following expenditures in connection with her software development business.
Cost of personal computer (100% business use) | $7,000 |
Cost of printer (100% business use) | 2,000 |
Furniture | 3,000 |
Supplies | 650 |
Fee paid to computer consultant | 3,500 |
Beth elected to deduct the maximum portion of the cost of the computer, printer, and furniture allowed under the provisions of § 179. These items were placed in service on January 15 and used 100 percent in her business.
Although her employer suggested that Beth attend a convention on current developments in corporate taxation, Beth was not reimbursed for the travel expenses of $1,420 she incurred in attending the conference. The $1,420 included $200 for meals.
Beth paid $300 for prescription medicines and $2,875 in physician and hospital bills. Medical insurance premiums were paid by her employer. Beth paid real property taxes of $1,766 on her home. Interest on her home mortgage was $3,845, and interest paid to credit card companies totaled $320.
Beth electronically contributed $30 each week to her church and $10 each week to the United Way. Professional dues and subscriptions totaled $350.
Beth paid $1,000 in estimated Federal income taxes throughout the year. She was covered for the entire year by Mesa Manufacturing's health insurance policy.
Part 1âTax Computation
Compute the 2015 net tax payable or refund due for Beth R. Jordan. If you use tax forms for your solution, you will need Forms Schedules A, B, C, D, and SE. Suggested software: H&R BLOCK Tax Software.