AFM123 Lecture Notes - Lecture 4: Accounts Receivable, Net Income, Retained Earnings

63 views7 pages

amaranthlizard249

26 Oct 2015

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM123

Professor

Peter Blake

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

Inventory account on balance sheet in current assets. Cost of goods sold in income statement right after sales. While they"re with us it"s inventory but as soon as they go to the customers they"re. Matching principle - record the expense when you record the related revenue. 1 inventory account - all costs incurred to bring the goods to a saleable position ex. include freight, customers, tariffs, duties, non-refundable sales tax, storage costs is included in inventory. Perpetual (keeping track of inventory all the time: ongoing detailed record is kept of each inventory item and it agree to balance. Sheet at that time, update when buy and when we sell updated perpetually . Periodic (once per period) (usually selling thousands of items: to determine balance sheet value, no cost of goods sold - record when goods are sold; cogs is instead calculated when inventory is counted using the cogs equation.

Related Questions

I need to Prepare entries for a job order, cost system, and cost of goods manufactured schedule, but my numbers aren't matching up. Please answer both parts of the question.

Case Inc. is a construction company specializing in custom patios. The patios are constructed of concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2017, the general ledger for Case Inc. contains the following data.

P15-3A Prepare entries for a job order cost system and cost of goods manufactured schedule
Case Inc. is a construction company specializing in custom patios. The patios are constructed of
concrete, brick, fiberglass, and lumber, depending upon customer preference. On June 1, 2017,
the general ledger for Case Inc. contains the following data.

Raw Materials Inventory			$4,200		Manufacturing Overhead Applied		$32,640
Work in Process Inventory			$5,540		Manufacturing Overhead Incurred		$31,650

Subsidiary data for Work in Process Inventory on June 1 are as follows.

	Job Cost Sheets
			Customer Job
	Cost Element		Rodgers		Stevens	Linton
	Direct materials		$600		$800	$900
	Direct labor		320		540	580
	Manufacturing overhead		400		675	725
			$1,320		$2,015	$2,205

During June, raw materials purchased on account were $4,900, and all wages were paid. Additional
overhead costs consisted of depreciation on equipment $900 and miscellaneous costs of $400 incurred
on account.
A summary of materials requisition slips and time tickets for June show the following.

	Customer Job		Materials Requisition slips		Time tickets
	Rodgers		$ 800		$850
	Koss		2,000		800
	Stevens		500		360
	Linton		1,300		1,200
	Rodgers		300		390
			4,900		3,600
	General use		1,500		1,200
			$ 6,400		$4,800

Overhead was charged to jobs at the same rate of $1.25 per dollar of direct labor cost. The patios for
customers Rodgers, Stevens, and Linton were completed during June and sold for a total of $18,900.
Each customer paid in full.

Instructions
(a)	Journalize the June transactions: (1) for purchase of raw materials, factory labor costs incurred,
	and manufacturing overhead costs incurred; (2) assignment of direct materials, labor, and overhead to
	production; and (3) completion of jobs and sale of goods.
(b)	Post the entries to Work in Process Inventory.
(c )	Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs.
(d)	Prepare a cost of goods manufactured schedule for June.
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" .



(a)(1)	Journalize the June transactions for purchase of raw materials, factory labor costs incurred,
	and manufacturing overhead costs incurred

	Raw Malerials Inventory
		Accounts Payable


	Factory Labor
		Cash


	Manufacturing Overhead
		Accumulated Depreciation- Equipment
		Accounts Payable


(a)(2)	Journalize the June transactions for assignment of direct materials, labor, and overhead to production

	Work in Pricess Inventory
	Manufacturing Overhead
		Raw Malerials Inventory


	Work in Pricess Inventory
	Manufacturing Overhead
		Factory Labor


	Work in Pricess Inventory
		Manufacturing Overhead


(a)(3)	Journalize the June transactions for completion of jobs and sale of goods.

	Finished Goods Inventory
		Work in Process Inventory


	Cash
		Sales


	Cost of Goods Sold
		Finished Goods Inventory


(b)	Post the entries to Work in Process Inventory.

	Work in Process Inventory
	6/1	Balance		June	Completed work
		Direct Materials
		Direct labor
		Overhead applied

	6/30	Balance


(c )	Reconcile the balance in Work in Process Inventory with the costs of unfinished jobs.

	6/30 balance in Work in Process Inventory
	Unfinished Job (Koss)
	Direct materials
	Direct labor
	Manufacturing overhead



(d)	Prepare a cost of goods manufactured schedule for June.

	CASE INC.
	Cost of Goods Manufactured Schedule
	For the Month Ended June 30, 2017

	Work in process, June 1
	Direct materials used
	Direct labor
	Manufacturing overhead applied
	Total manufacturing costs
	Total cost of work in process
	Less: Work in process, June 30
	Cost of goods manufactured



After you have completed P15-3A, consider the following additional question.
1.	Assume that indirect labor and raw materials purchases changed to $1,400 and $6,800 respectively.
	Also assume that overhead is applied at the rate of $1.50 per dollar of direct labor. The three
	completed jobs were sold for $22,000 cash. Revise the journal entries to reflect these changes.

turquoisewater-buffalo175

Yu Technology Co. manufactures CDs and DVDs for computer software and entertainment companies. Yu uses job order costing and has a perpetual inventory system. The business has a highly labour intensive production process, so it applies manufacturing overhead to jobs based on direct labour cost. Yu expects to incur $1,080,000 0f manufacturing overhead costs and estimated direct labour costs of $900,000 during 2015. At the end of March 2015,

Yu Technology reported work in process inventory of $15,000

During April 2015, Yu Technology recorded the following transactions.

1) Materials requisitioned for use in production:

Direct materials: $120,000

Indirect materials: $20,000

2) Advertising costs were incurred, $15,000.

3) Salaries and wages incurred as follows:

Direct labour $121,875

Indirect labour $40,625

Selling and administrative salaries $ 25,000

4) Insurance expired during the year, $30,000 (90% relates to the factory, the remainder is on selling and administrative items).

5) Depreciation recorded for the year, $80,000 (75% relates to factory assets and the remainder relates to selling and administrative assets).

6) Utilities expense incurred, $53,750 (80% of this amount relates to the factory, the remainder relates to the administrative offices).

7) Applied manufacturing overhead costs to jobs

8) Two jobs were completed with total costs of $120,000 & $85,000 respectively. They were sold on account at a mark-up of 75% on cost.

All purchases and services were acquired on account.

(d) Record a journal entry to close manufacturing overhead to cost of goods sold.
(e) Prepare an income statement for the year
(f) Determine the balance in work in process inventory on April 30.

ultramarineclam743

Yu Technology reported work in process inventory of $15,000

During April 2015, Yu Technology recorded the following transactions.

1) Materials requisitioned for use in production:

Direct materials: $120,000

Indirect materials: $20,000

2) Advertising costs were incurred, $15,000.

3) Salaries and wages incurred as follows:

Direct labour $121,875

Indirect labour $40,625

Selling and administrative salaries $ 25,000

4) Insurance expired during the year, $30,000 (90% relates to the factory, the remainder is on selling and administrative items).

5) Depreciation recorded for the year, $80,000 (75% relates to factory assets and the remainder relates to selling and administrative assets).

6) Utilities expense incurred, $53,750 (80% of this amount relates to the factory, the remainder relates to the administrative offices).

7) Applied manufacturing overhead costs to jobs

8) Two jobs were completed with total costs of $120,000 & $85,000 respectively. They were sold on account at a mark-up of 75% on cost.

All purchases and services were acquired on account.

1. State the journal entries necessary to record the above transactions in the general journal.

2. Is manufacturing overhead over-applied or under-applied? By how much?

3. Record a journal entry to close manufacturing overhead to cost of goods sold.

whitewhale369

AFM123 Lecture Notes - Lecture 4: Accounts Receivable, Net Income, Retained Earnings

Document Summary

Get access

Related Documents

AFM123 Study Guide - Final Guide: Accounts Receivable, Longrun, Cash Flow Statement

AFM123 Lecture Notes - Weighted Arithmetic Mean, Income Statement, Finished Good

AFM123 Chapter Notes - Chapter 7: Budget, Finished Good, Income Statement

Related Questions