Connect Access Card For Fundamental Accounting Principles
Connect Access Card For Fundamental Accounting Principles
24th Edition
ISBN: 9781260158526
Author: John J Wild
Publisher: McGraw-Hill Education
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Chapter 19, Problem 2BPSB
To determine

Concept Introduction:

Journal entries-

The business runs with the transactions it makes. Every transaction results in some outcome like the creation of asset, liability, income, loss, gain or expense. The debits and the credits are made on the basis of the rules of the accounting.

To prepare:

To prepare the journam entry.

Expert Solution
Check Mark

Answer to Problem 2BPSB

    S.No.Accounts titles and ExplanationDebit ($)Credit ($)
    (a) Work in process inventory12,200
    Raw materials inventory12,200
    (To ssign raw material inventory to job)
    (b)Work in process inventory13,000
    Factory wages payable13,000
    (To assign cost of direct labor to job)
    (c) Work in process inventory26,000
    Factory overhead26,000
    (To apply overhead at 200% of direct labor cost)
    (d)Factory overhead2,100
    Raw materials inventory2,100
    (To assign cost of indirect material to job)
    (e)Factory overhead3,000
    Factory wages payable3,000
    (To assign cost of indirect labour to job)

Explanation of Solution

Journal entries are explained as follows

(a) Work in process is a current asset and its increases so it is debited. Raw material inventory is a current asset and its balance decreases, so it is creditd.

Amount is calculated as follows-

Given,

  • Direct materials to Job 603 = $4,600
  • Direct materials to Job 604 = $7,600
  •   Amount =Direct materials to Job 603+ Direct materials to Job 604Amount =4,600+7,600Amount =12,200

    (b) Work in process is a current asset and its increases so it is debited. Factory wages are current liabilities and its balance increases to its credited.

    Amount is calculated as follows-

    Given,

  • Direct labor to Job 603 = $5,000
  • Direct labor to Job 604 = $8,000
  •   Amount =Direct labor to Job 603+ Direct labor to Job 604Amount =5,000+8,000Amount =13,000

    (c) Work in process is a current asset and its increases so it is debited. Factory overhead is an expense and its balance decreases, so it is credited.

      Amount = Direct Labor*200%Amount =13,000*200%Amount =26,000

    (d) Factory overhead is a cost so it is debited. Raw material inventory is an asset and its balance decreases, so it is credited.

    (e)Factory overhead is a cost so it is debited. Factory wages payable is a liability and it is increasing so it is credited.

    Conclusion:

    Thus, the journal entries are prepared.

    To determine

    Concept Introduction:

    Cost of goods sold -

    Cost of goods sold can be defined as the total cost assigned to the goods that are sold during a period of time. It is calculated by summing up all the costs incurred starting from purchases till the process of manufacturing. Adjusting entries-

    Adjusting entries are prepared to complete the financial statement of the company and to reflect the accrual method of accounting. Adjusting entries are prepared before issuance of financial statement.

    Under or Over applied overhead-

    Under or Over applied overhead- It is the difference between the actual and applied overhead.

    If the actual overhead incurred is more than the overhead applied during a particular period, then it is a case of under-applied of overhead cost.

    If the actual overhead incurred is less than the overhead applied during a particular period, then it is a case of over-applied of overhead cost.

    To determine revised balance and to prepare the adjusting entry.

    Expert Solution
    Check Mark

    Answer to Problem 2BPSB

      Factory Overhead
      ParticularsAmount ($)ParticularsAmount ($)
      Beginning balance27,000Work in process inventory26,000
      Factory wages payable3,000Under applied overhead6,100
      Raw material inventory2,100
      Balance32,10032,100

    Adjusting journal entry:

      S.No.Accounts titles and ExplanationDebit ($)Credit ($)
      A.Cost of goods sold6,100
      Factory overhead6,100
      (To assign cost of indirect labor to job)

    Explanation of Solution

    Underapplied overhead balance is calculated as follows-

      Total balance = Begiining balance+Factory wages payable+Raw material inventoryTotal balance =27,000+3,000+2,100Total balance =32,100   Underapplied overhead= Total balanceWork in process inventory   Underapplied overhead=32,10026,000   Underapplied overhead=6,100

    Explanation for journal entry-

    When overhead is underapplied, the jobs are charged with less overhead than the actual and cost of goods sold will be charged with less overhead. Cost of goods is a cost and its balance increases, so it is debited and factory overhead is credited.

    Conclusion:

    Thus, overhead is under applied by $6,100.

    To determine

    Concept Introduction:

    Trial balance-

    Trial balance is an accounting statement which contains all debit and credit balances of the ledger accounts in which transactions have been posted during a period. It is prepared to check the arithmetical accuracy of transactions.

    To prepare:

    To prepare trial balance.

    Expert Solution
    Check Mark

    Answer to Problem 2BPSB

      Revised trial balance
      ParticularsDebit (Amount $)Credit (Amount $)
      Cash64,000
      Account receivable42,000
      Raw material inventory11,700
      Work in process inventory51,200
      Finished goods inventory9,000
      Prepaid rent3,000
      Factory wages payable16,000
      Accounts payable10,500
      Notes payable13,500
      Common stock30,000
      Retained earnings87,000
      Sales180,000
      Cost of goods sold111,100
      Operating expenses45,000
      Total337,000337,000

    Explanation of Solution

    Total of debit side is calculated as follows-

       Total of debit side =Cash+Account receivable+ Raw material inventory+ Work in process inventory + Finished goods inventory+ Cost of goods sold+ Operating expenses Total of debit side=64,000+42,000+11,700+51,200+9,000+3,000+111,100+45,000Total of debit side =337,000

    Total of credit side is calculated as follows-

      Total of credit side=Factory wages payable+Accounts payable+ Notes payable+ Common stock+ Retained earnings+ SalesTotal of credit side=16,000+10,500+13,500+30,000+87,000+180,000Total of credit side=337,000

    Conclusion:

    Thus, revised trial balance is prepared.

    To determine

    Concept Introduction:

    Income statement-

    Income statement refers to the financial statement that evaluates the financial performance of the company. It shows the expenses, revenues and net income of a firm over specific period of time. Therefore evaluation of financial performance can be undertaken by identifying the revenues and expenses incurred by the business through both non-operating and operating activities.

    Balance sheet-

    Balance sheet is a statement which shows the financial position of the company at a particular date. The balance sheet explains about the company's assets and also explains how these assets are being financed. Assets are usually financed either through debt or equity. So, balance sheet gives the clear picture of company's assets, liabilities and equity.

    To prepare:

    To prepare income statement and balance sheet.

    Expert Solution
    Check Mark

    Answer to Problem 2BPSB

      Income statement
      For the year ended 2019
      ParticularsAmount ($)
      Sales revenue180,000
      Less: Cost of goods sold(111,100)
      Gross profit68,900
      Less: Operating expense(45,000)
      Net income23,900
      Balance Sheet
      As on December 31, 2019
      DetailsAmount ($)Amount ($)
      Assets
      Current assets:
      Cash64,000
      Accounts receivable42,000
      Raw material inventory11,700
      Work in process inventory51,200
      Finished goods inventory9,000
      Prepaid rent3,000
      Total Assets 180,900
      Liabilities and Stockholder's Equity
      Liabilities:
      Factory wages payable16,000
      Accounts payable10,500
      Notes payable13,500
      Total liabilities 40,000
      Stockholder's Equity:
      Common stock 30,000
      Retained earnings110,900140,900
      Total Liabilities and Stockholder's Equity 180,900

    Explanation of Solution

    Income Statement

      Gross profit = Net income  Cost of goods soldGross profit =180,000111,100Gross profit =68,900

      Net income = Gross profitOperating expensesNet income =68,90045,000Net income =23,900

    Balance sheet

    Assets-

       Assets=Cash+Accounts receivable+Raw material inventory+Work in process inventory +Finished goods inventory+Prepaid rent Assets=64,000+42,000+11,700+51,200+9,000+3,000Assets=180,900

    Total Liabilities and Stockholder's Equity-

      Total Liabilities and Stockholder's Equity=Liabilities+ Stockholder's EquityTotal Liabilities and Stockholder's Equity= Factory wages payable+ Accounts payable+ Notes payable+ Common stock+ Retained earningsTotal Liabilities and Stockholder's Equity=(16,000+10,500+13,500)+(30,000+110,900)Total Liabilities and Stockholder's Equity=40,000+140,900Total Liabilities and Stockholder's Equity=180,900

    Conclusion:

    Thus, Income statement and balancesheet is prepared.

    To determine

    Concept Introduction:

    Income statement-

    Income statement refers to the financial statement that evaluates the financial performance of the company. It shows the expenses, revenues and net income of a firm over specific period of time. Therefore evaluation of financial performance can be undertaken by identifying the revenues and expenses incurred by the business through both non-operating and operating activities.

    Balance sheet-

    Balance sheet is a statement which shows the financial position of the company at a particular date. The balance sheet explains about the company's assets and also explains how these assets are being financed. Assets are usually financed either through debt or equity. So, balance sheet gives the clear picture of company's assets, liabilities and equity.

    To Analyse:

    To analyse the impact of errors.

    Expert Solution
    Check Mark

    Answer to Problem 2BPSB

    Impact on Income statement-

    If direct material of $2,100 is treated as indirect materail, cost of goods sold in income statement will increase and income earned by the entity decreases.

    Imapct on Balance sheet-

    If direct material of $2,100 is treated as indirect material, Retained earnings as per balance sheet decreases.

    Explanation of Solution

    Answer is explained above.

    Conclusion:

    Thus, Impact of error on income statement and balance sheet is analysed.

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    Chapter 19 Solutions

    Connect Access Card For Fundamental Accounting Principles

    Ch. 19 - 11. Why must a company use predetermined overhead...Ch. 19 - How would a hospital apply job order costing?...Ch. 19 - Harley-Davidson manufactures 30 custom-made,...Ch. 19 - Prob. 14DQCh. 19 - Jobs and job lots C1 Determine which of the...Ch. 19 - Job cost sheets C2 Clemens Cars's job cost sheet...Ch. 19 - Documents in job order costing P1 P2 P3 The left...Ch. 19 - Raw materials journal entries P1 During the...Ch. 19 - Prob. 5QSCh. 19 - Prob. 6QSCh. 19 - Prob. 7QSCh. 19 - Prob. 8QSCh. 19 - Prob. 9QSCh. 19 - Prob. 10QSCh. 19 - Prob. 11QSCh. 19 - Prob. 12QSCh. 19 - Jab order costing of services A1 An advertising...Ch. 19 - Job order costing of services A1 An advertising...Ch. 19 - Job cost sheet C2 Eco Skate makes skateboards from...Ch. 19 - Exercise 19-1 Job order production C1 Match each...Ch. 19 - Exercise 19-2 Job cost computation C2 The...Ch. 19 - Exercise 19-3 Analysis of cost flows C2 As of the...Ch. 19 - Exercise 19-4 Recording product costs P1 P2 P3...Ch. 19 - Exercise 19-5 Manufacturing cost flows P1 P2 P3...Ch. 19 - Exercise 19-6 Recording events in job order...Ch. 19 - Exercise 19-7 Cost flows in a jab order costing...Ch. 19 - Exercise 19-8 Journal entries for materials P1 Use...Ch. 19 - Exercise 19-9 Journal entries for labor P2 Use...Ch. 19 - Exercise 19-10 Journal entries for overhead P3 Use...Ch. 19 - Exercise 19-11 Overhead rate; costs assigned to...Ch. 19 - Exercise 19-12 Analyzing costs assigned to work in...Ch. 19 - Exercise 19-13 Adjusting factory overhead P4 Refer...Ch. 19 - Exercise 19-14 Adjusting factory overhead P4...Ch. 19 - Prob. 15ECh. 19 - Prob. 16ECh. 19 - Exercise 19-17 Overhead rate calculation,...Ch. 19 - Exercise 19-18 Job order costing for services A1...Ch. 19 - Exercise 19-19 Job order costing of services A1...Ch. 19 - Exercise 19-20 Direct materials journal entries P1...Ch. 19 - Problem 19-1A Production costs computed and...Ch. 19 - Problem 19-2 A Source documents, journal entries,...Ch. 19 - Prob. 3APSACh. 19 - Prob. 4APSACh. 19 - Problem 19-5A Production transactions, subsidiary...Ch. 19 - Problem 19-1B Production costs computed and...Ch. 19 - Prob. 2BPSBCh. 19 - Prob. 3BPSBCh. 19 - Problem 19-4B Overhead allocation and adjustment...Ch. 19 - Problem 19-5B Production transactions, subsidiary...Ch. 19 - The computer workstation furniture manufacturing...Ch. 19 - The General Ledger tool in Connect automates...Ch. 19 - Manufacturers and merchandisers can apply...Ch. 19 - Prob. 2AACh. 19 - Apple and Samsung compete in the global...Ch. 19 - Assume that your company sells portable housing to...Ch. 19 - Assume that you are preparing for a second...Ch. 19 - Prob. 3BTNCh. 19 - Consider the activities undertaken by a medical...Ch. 19 - Refer to the chapter opener regarding Brennan...Ch. 19 - Prob. 6BTN
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