ACC 212 Lecture Notes - Lecture 3: Accounts Payable, Accounts Receivable
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1.) When products held in inventory are sold:
A.)Cost of Goods Sold is credited.
B.)Work in Process Inventory is credited.
C.)Finished Goods Inventory is credited.
D.)Finished Goods Inventory is debited.
2.)Since manufacturing costs (direct materials, direct labor,and overhead) are incurred in the process of manufacturing units ofproduct, these costs are credited t
A.) | The Direct Materials Inventory, Direct Labor, and ManufacturingOverhead accounts respectively. |
B.) | Liability accounts. |
C.) | The Work in Process Inventory account. |
D.) | The Cost of Goods Sold account. |
3.)Management accounting systems are designed to assistorganizations in the performance of all of the following functionsexcept:
A.) | The assignment of decision-making authority over companyassets. |
B.) | Planning and decision-making. |
C.) | Monitoring, evaluating, and rewarding performance. |
D.) | The preparation of income tax returns. |
4.)In a schedule of cost of finished goods manufactured, thefigure for total manufacturing costs:
A.) May be less than the cost of direct materials used. | |
B.) May be less than the direct labor costs assigned toproduction. | |
C.) May be less than the manufacturing overhead applied toproduction. | |
D.) May be less than the cost of finished goodsmanufactured. |
5.) When a manufacturing company purchases raw materials orcomponent parts to be used in manufacturing finished goods, thesecosts are initially debited to:
A.) Expense accounts. | |
B.) Raw Materials Inventory. | |
C.) Finished Goods Inventory. | |
D.) Manufacturing Overhead. |
6.) The wages paid to employees working directly on a company'sproducts would be shown as a:
A.) Credit to Direct Labor. | |
B.) Debit to Direct Labor. | |
C.) Credit to Work in Process. | |
D.) Debit to Manufacturing Overhead. |
7.) Amounts credited to the Work in Process inventory accountmay best be described as:
A.) The cost of finished goods manufactured. | |
B.) Total manufacturing costs charged to production. | |
C.) The cost of goods sold. | |
D.) Direct materials purchased, direct labor costs paid, andpayments for items classified as manufacturing overhead. |
The Polaris Company uses a job-order costing system. The following data relate to October, the first month of the companyâs fiscal year. |
a. | Raw materials purchased on account, $210,000. |
b. | Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials). |
c. | Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000. |
d. | Depreciation recorded on factory equipment, $40,000. |
e. | Other manufacturing overhead costs incurred during October, $70,000 (credit Accounts Payable). |
f. | The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October. |
g. | Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods. |
h. | Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost. |
Required: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1. | Prepare journal entries to record the information given above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Raw materials purchased on account 210,000 Transaction General Journey Debit Credit A Raw materials issued to production, $119,000 ($178,000 direct materials and $12,000 indirect materials) Transaction General Journey Debit Credit B Direct Labor Cost incurred, $90,000; indirect labor cost incurred, $110,000 Transaction General Journey Debit Credit C Depreciation recorded on factory equipment, $40,000 Transaction General Journey Debit Credit D Other man ufacturing overhead cost incrred during October $70,000 (credit Accounts Payable) Transaction General Journey Debit Credit E The company applies manufactring overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October Transaction General Journey Debit Credit F. Production orders costing $520,000 according to their job cost sheets were completed during october and transferred to Finished goods Transaction General Journey Debit Credit G. Record the cost of goods sold Transaction General Journey Debit Credit H(1) REcord the sales account Transaction General Journey Debit Credit h(2)
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Problem 4
Prepare journal entries to reflect the following transactionsfor a textile company.After you complete the entries, determine theamount to include in raw materials, work in process, and finishedgoods.
May 7, 20X7 | Purchased fabric to be used in the manufacturing process. Thepurchase price was $7,000, on account. |
May 11, 20X7 | Transferred 70% of the raw materials purchases on May 7 intoproduction. |
May 11, 20X7 | Incurred direct labor cost of $4,200.Factory overhead is appliedat 30% of the direct labor cost. |
May 12, 20X7 | Transferred completed product with total assigned costs of$5,700 to finished goods. |
May 13, 20X7 | Sold and delivered half of the finished goods (from May 12) to acustomer for $9,000 cash. |
WORKSHEET #4
GENERAL JOURNAL | |||
Date | Accounts | Debit | Credit |
5-7-X7 | |||
To record purchase of raw materials. | |||
5-11-X7 | |||
To transfer raw materials to production, record direct laborcost on job, and apply overhead at the predetermined rate. | |||
5-12-X7 | |||
To transfer completed units to finished goodsinventory. | |||
5-13 X7 | |||
To record sale of finished product for $9,000. | |||
5-13-X7 | |||
To transfer finished goods to cost of goods sold. |