Chapter 3.A, Problem 2E

EXERCISE 3A-2 Transaction Analysis LO3-5

Adams Company is a manufacturer that completed numerous transactions during the month, some of which are show below:

1. Manufacturing overhead costs incurred on account, $80,000.
2. Depreciation was recorded for the month, $35,000 (80°o related to factory equipment, and the remainder related to selling and administrative equipment).
3. Prepaid insurance expired during the month, $2_:500 (75% related to production, and 25° o related to selling and administration).
4. Applied $115,000 of manufacturing overhead to production during the month.
5. Closed $5,125 of overapplied overhead to cost of goods sold.

Required:

The table shown below includes a subset of Adams Company’s balance sheet accounts. Record each of the above transactions using the accounts that are given. If a transaction increases an account balance, then record the amount as a positive number. If it decreases an account balance, then record the amount in parentheses.