The costs listed in the following related to the factory were incurred during the period. (Hint: Record these items in one entry with one debit to manufacturing overhead and four separate credits):
Building depreciation $580,000 Insurance (prepaid during 2016, now expired) $220,000 Utilities (on account) $ 80,000 Maintenance (paid cash) $440,000
-Manufacturing overhead was applied at a rate of $20 per machine hour, and 90,000 machine hours were utilized during the year. (Hint: No need to calculate the predetermined overhead rate since it is already given to you here.)
-Miscellaneous selling costs totaling $430,000 were paid. These costs were recorded in an account called selling expenses.
-Miscellaneous general and administrative costs totaling $265,000 were paid. These costs were recorded in an account called G&A expenses.
-Goods costing $2,030,000 (per the job cost sheets) were completed and transferred out of work-in-process inventory.
-Goods were sold on account for $3,800,000.
-The goods sold in transaction 12 had a cost of $2,570,000 (per the job cost sheets).
-Payments totaling $3,300,000 from credit customers related to transaction 12 were received
Required:
Prepare T-accounts for raw materials inventory, work-in-process inventory, finished goods inventory, manufacturing overhead, and cost of goods sold. Enter the beginning balances for the inventory accounts. (Manufacturing overhead and cost of goods sold are temporary accounts and thus do not have a beginning balance.)
Prepare a journal entry for each transaction from 1 through 14 in a format like the one in Figure 2.7, and where appropriate, post each entry to the T-accounts set up in requirement a. Note that these entries reflect the flow of costs through the inventory and cost of goods sold accounts for the year, so you are only posting the dollar amounts related to the T-accounts set up in requirement a. Label each entry in the T-accounts by transaction number, include a short description (e.g., direct materials and manufacturing overhead applied), and total each T-account.
Based on the balance in the manufacturing overhead account prepared in requirement b, prepare a journal entry to close the manufacturing overhead account to cost of goods sold.
Prepare an income statement for the year ended December 31, 2016. Remember to adjust cost of goods sold for any underapplied or overapplied overhead from requirement c.
Why is cost of goods sold adjusted upward on the income statement?
The costs listed in the following related to the factory were incurred during the period. (Hint: Record these items in one entry with one debit to manufacturing overhead and four separate credits):
| Building depreciation | $580,000 |
| Insurance (prepaid during 2016, now expired) | $220,000 |
| Utilities (on account) | $ 80,000 |
| Maintenance (paid cash) | $440,000 |
-Manufacturing overhead was applied at a rate of $20 per machine hour, and 90,000 machine hours were utilized during the year. (Hint: No need to calculate the predetermined overhead rate since it is already given to you here.)
-Miscellaneous selling costs totaling $430,000 were paid. These costs were recorded in an account called selling expenses.
-Miscellaneous general and administrative costs totaling $265,000 were paid. These costs were recorded in an account called G&A expenses.
-Goods costing $2,030,000 (per the job cost sheets) were completed and transferred out of work-in-process inventory.
-Goods were sold on account for $3,800,000.
-The goods sold in transaction 12 had a cost of $2,570,000 (per the job cost sheets).
-Payments totaling $3,300,000 from credit customers related to transaction 12 were received
Required:
Prepare T-accounts for raw materials inventory, work-in-process inventory, finished goods inventory, manufacturing overhead, and cost of goods sold. Enter the beginning balances for the inventory accounts. (Manufacturing overhead and cost of goods sold are temporary accounts and thus do not have a beginning balance.)
Prepare a journal entry for each transaction from 1 through 14 in a format like the one in Figure 2.7, and where appropriate, post each entry to the T-accounts set up in requirement a. Note that these entries reflect the flow of costs through the inventory and cost of goods sold accounts for the year, so you are only posting the dollar amounts related to the T-accounts set up in requirement a. Label each entry in the T-accounts by transaction number, include a short description (e.g., direct materials and manufacturing overhead applied), and total each T-account.
Based on the balance in the manufacturing overhead account prepared in requirement b, prepare a journal entry to close the manufacturing overhead account to cost of goods sold.
Prepare an income statement for the year ended December 31, 2016. Remember to adjust cost of goods sold for any underapplied or overapplied overhead from requirement c.
Why is cost of goods sold adjusted upward on the income statement?
