Concept explainers
Sultan, Inc. manufactures goods to special order and uses a
Required:
- 1. Prepare a schedule reflecting the cost of each of the four jobs.
- 2. Prepare
journal entries to record the transactions. - 3. Compute the ending balance in Work in Process.
- 4. Compute the ending balance in Finished Goods.
1.
Prepare a schedule that reflects the cost of all four jobs.
Explanation of Solution
Prepare a schedule that reflects the cost of all four jobs.
Particulars |
Job 101 ($) | Job 102 ($) | Job 103 ($) |
Job 104 ($) |
Total Cost ($) |
Direct Materials | 2,200 | 5,700 | 7,100 | 1,700 | 16,700 |
Direct Labor | 2,700 | 6,800 | 9,200 | 2,100 | 20,800 |
Factory Overhead | 1,200 | 2,000 | 3,800 | 1,000 | 8,000 |
Total | 6,100 | 14,500 | 20,100 | 4,800 | 45,500 |
Table (1)
2.
Provide journal entry to record the given transactions.
Explanation of Solution
Provide journal entry to record the given transactions.
Date | Accounts title and explanation | Debit ($) | Credit ($) |
a | Materials | 37,000 | |
Accounts payable | 37,000 | ||
(To record materials purchased on account) | |||
b | Work in Process | 16,700 | |
Factory overhead | 1,350 | ||
Materials | 18,050 | ||
(To record issue of direct materials and indirect materials) | |||
c | Payroll | 23,050 | |
Wages Payable | 23,050 | ||
(To record factory wages and salaries) | |||
d | Work in Process | 20,800 | |
Factory overhead | 2,250 | ||
Payroll | 23,050 | ||
(To record payment of wages to the labor) | |||
e | Factory overhead | 2,400 | |
Accounts payable | 2,400 | ||
(To record factory overhead costs on account) | |||
f. | Factory overhead | 2,000 | |
Accumulated Depreciation - Machinery | 2,000 | ||
(To record depreciation on factory machine) | |||
g. | Work in Process | 8,000 | |
Factory Overhead | 8,000 | ||
(To record transfer of factory overhead to Work-in process) | |||
h. | Finished Goods (1) | 40,700 | |
Work in Process | 40,700 | ||
(To record the transfer of cost of completed work to finished goods) | |||
i | Accounts receivable | 39,000 | |
Sales | 39,000 | ||
(To record the sale made on account) | |||
Cost of goods sold (2) | 20,600 | ||
Finished goods | 20,600 | ||
(To record the cost of goods sold) |
Table (2)
Working note 1: Calculate the cost of completed work (finished goods).
Working note 2: Calculate the cost of goods sold.
3.
Calculate the ending balance in work-in process.
Explanation of Solution
Calculate the ending balance in work-in process.
Hence, the ending balance in work-in process is $4,800.
4.
Calculate the ending balance in finished goods.
Explanation of Solution
Calculate the ending balance in finished goods.
Hence, the ending balance in finished goods is $20,100.
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Chapter 1 Solutions
Principles of Cost Accounting
- Gerken Fabrication Inc. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of March: a. Compute the total production cost of each job. b. Prepare the journal entries to charge the costs of materials, labor, and factory overhead to Work in Process. c. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. d. Compute the unit cost of each job. e. Compute the selling price per unit for each job, assuming a mark-on percentage of 50%.arrow_forwardChannel Products Inc. uses the job order cost system of accounting. The following is a list of the jobs completed during March, showing the charges for materials issued to production and for direct labor. Assume that factory overhead is applied on the basis of direct labor costs and that the predetermined rate is 200%. Required: Compute the amount of overhead to be added to the cost of each job completed during the month. Compute the total cost of each job completed during the month. Compute the total cost of producing all the jobs finished during the month.arrow_forwardUse the space provided below to prepare six summary journal entries for the month of August. These entries record (1) cost of direct materials used, (2) cost of direct labor, (3) cost of applied overhead, (4) cost of jobs completed, (5) cost of goods sold, and (6) total sales on account. Then set up T-accounts for Work in Process, Finished Goods, Cost of Goods Sold, and Sales. Post the entries to the appropriate accounts and then balance each account. Finally, prepare a supporting schedule by job number showing the cost of ending work in process, finished goods, and cost of goods sold.arrow_forward
- Bangor Products Co. obtained the following information from its records for April: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for April: a. The gross profit or loss for each job completed and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)arrow_forwardLeen Production Co. uses the job order cost system of accounting. The following information was taken from the companys books after all posting had been completed at the end of May: a. Compute the total production cost of each job. b. Prepare the journal entry to transfer the cost of jobs completed to Finished Goods. c. Compute the selling price per unit for each job, assuming a mark-on percentage of 40%. d. Prepare the journal entries to record the sale of Job 1065.arrow_forwardSpokane Production Co. obtained the following information from its records for July: Required: 1. Prepare, in summary form, the journal entries that would have been made during the month to record issuing materials to production, the distribution of labor, and overhead costs; the completion of the jobs; and the sale of the jobs. 2. Prepare schedules computing the following for July: a. The gross profit or loss for each job completed and sold, and for the business as a whole. b. For each job, the gross profit or loss per unit. (Round to the nearest cent.)arrow_forward
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- Chrome Solutions Company manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, Stamping and Plating, and two service departments, Power and Maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30: Additional information: The balance of the materials account represents the following: The company uses the FIFO method of accounting for all inventories. Material A is used in the Stamping Department, and materials B and C are used in the Plating Department. The balance of the work in process account represents the following costs that are applicable to Job 905. (The customer’s order is for 1,000 units of the finished product.) The finished goods account reflects the cost of Job 803, which was finished at the end of the preceding month and is awaiting delivery orders from the customer. At the beginning of the year, factory overhead application rates were based on the following data: In October, the following transactions were recorded: Purchased the following materials and supplies on account: The following materials were issued to the factory: Customers’ orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively. Factory wages and office, sales, and administrative salaries are paid at the end of each month. (Assume FICA and federal income tax rates of 8% and 10%, respectively.) Record the company’s liability for state and federal unemployment taxes. (Assume rates of 4% and 1%, respectively, and that none of the employees had reached the $8,000 limit.) Record the payroll distribution for October. Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300. Miscellaneous factory overhead incurred during October totaled $4,230. Miscellaneous selling and administrative expenses were $1,500. These items as well as the FICA tax and federal income tax withheld for September were paid. (See account balances on the post-closing trial balance for September 30.) Annual depreciation on plant assets is calculated using the following rates (round to nearest dollar): Factory buildings–5% Machinery and equipment–20% Office equipment–20% The balance of the prepaid insurance account represents a three-year premium for a fire insurance policy covering the factory building and machinery. It was paid on the last day of the preceding month and became effective on October 1. The summary of factory overhead prepared from the factory overhead ledger is reproduced here: The total expenses of the Maintenance Department are distributed on the basis of floor space occupied by the Power Department (8,820 sq ft), Stamping Department (19,500 sq ft), and Plating Department (7,875 sq ft). The power department expenses are then allocated equally to the Stamping and Plating departments. After the actual factory overhead expenses have been distributed to the departmental accounts and the applied factory overhead has been recorded and posted, any balances in the departmental accounts are transferred to Under- and Overapplied Overhead. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month. During the month, Jobs 803 and 905 were sold with a mark-on percentage of 50% on cost. Received $55,500 from customers in payment of their accounts. Checks were issued in the amount of $43,706 for payment of the payroll. 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