AFM101 Chapter Notes - Chapter 8: Write-Off, High Tech, Perpetual Inventory

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champagnegnat240

30 Dec 2016

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM101

Professor

Donna Psutka

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AFM101 Full Course Notes

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Chapter 8: reporting & interpreting cost of sales and inventory. Inventory a tangible property held for sale in the normal course of business or used in producing goods/services for sale current asset. Merchandise inventory goods held for resale in the normal course of business held by merchandisers. Manufacturing businesses hold the following types of inventory: raw materials inventory items acquired purchase, growth, or extraction for processing into finished goods. Goods in inventory are recorded in conformity with the cost principle. Cash-equivalent inventory cost includes the sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to a usable or saleable condition and location. Accumulating purchases costs should stop either when the raw materials are ready for use or when merchandise inventory is ready for shipment to customers. Direct labour cost that represents the earnings of employees who work directly on the products being manufactured this doesn"t apply to a factory supervisor.

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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.

chocolatetiger413

Required information

Use the following information for the Exercises below.

[The following information applies to the questions displayed below.]

The following data is provided for Garcon Company and Pepper Company.

	Garcon Company			Pepper Company
Beginning finished goods inventory		$	12,100	$	17,950
Beginning work in process inventory			19,000		23,100
Beginning raw materials inventory			11,700		10,050
Rental cost on factory equipment			28,750		25,900
Direct labor			20,600		37,400
Ending finished goods inventory			20,600		13,100
Ending work in process inventory			22,900		21,600
Ending raw materials inventory			6,800		9,200
Factory utilities			10,650		14,000
Factory supplies used			11,500		5,100
General and administrative expenses			31,500		56,000
Indirect labor			2,350		8,680
RepairsâFactory equipment			7,340		3,750
Raw materials purchases			37,000		63,500
Selling expenses			57,200		48,100
Sales			204,030		327,510
Cash			22,000		21,700
Factory equipment, net			232,500		148,825
Accounts receivable, net			15,800		24,950
Exercise 14-8 Cost of goods manufactured and cost of goods sold computation LO P1, P2 Required: 1. Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017. 2. Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.

Required 1. Complete the table to find the cost of goods manufactured for both Garcon Company and Pepper Company for the year ended December 31, 2017.

	Garcon Company	Pepper Company
Direct materials


Raw materials available for use	0	0

Direct materials used	0	0

Factory overhead






Total factory overhead	0	0
Total manufacturing costs

Total cost of work in process	0	0

Cost of goods manufactured	$0	$0

Required 2:.

Complete the table to calculate the cost of goods sold for both Garcon Company and Pepper Company for the year ended December 31, 2017.

	Garcon Company	Pepper Company
Cost of goods available for sale
Cost of goods sold	$0	$0

ultramarinetrout400

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of May:

1		Rainier Company ($)	Yakima Company ($)
2	Materials inventory, May 1	100,000.00	48,200.00
3	Materials inventory, May 31	(a)	50,000.00
4	Materials purchased	950,000.00	710,000.00
5	Cost of direct materials used in production	938,500.00	(a)
6	Direct labor	2,860,000.00	(b)
7	Factory overhead	1,800,000.00	446,000.00
8	Total manufacturing costs incurred May	(b)	$2,484,200.00
9	Total manufacturing costs	5,998,500.00	2,660,600.00
10	Work in process inventory, May 1	400,000.00	176,400.00
11	Work in process inventory, May 31	382,000.00	(c)
12	Cost of goods manufactured	(c)	2,491,500.00
13	Finished goods inventory, May 1	615,000.00	190,000.00
14	Finished goods inventory, May 31	596,500.00	(d)
15	Sales	9,220,000.00	4,550,000.00
16	Cost of goods sold	(d)	2,470,000.00
17	Gross profit	(e)	(e)
18	Operating expenses	1,000,000.00	(f)
19	Net income	(f)	1,500,000.00

Required:

For both companies, determine the amounts of the missing items (A) through (F), identifying them by letter.
Prepare Yakima Company's statement of cost of goods manufactured for May.
Prepare Yakima Company's income statement for May.

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AFM101 Chapter Notes - Chapter 8: Write-Off, High Tech, Perpetual Inventory

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