Brooks Corporation uses a job-order costing system to apply manufacturing costs to jobs. The company closes its under applied or over applied overhead to cost of goods sold. Its balance sheet on March 1 is as follows:

During March the company completed the following transactions:
a. Purchased raw materials for cash, $69,000.
b. Raw materials used in production, $77,000 ($67,000 was direct materials and $10,000 was indirect materials).
c. Paid $178,000 of salaries and wages in cash ($102,000 was direct labor, $23,000 was indirect labor, and $53,000 was related to employees responsible for selling and administration).
d. Various manufacturing overhead costs paid in cash to support production, $41,000.
e. Depreciation recorded on property, plant, and equipment, $35,000 (85% related to manufacturing equipment and 15% related to assets that support selling and administration).
f. Various selling expenses incurred on account, $27,000.
g. Prepaid insurance expired during the month, $450 (60% related to production, and 40% related to selling and administration).
h. Manufacturing overhead applied to production, $101,000.
i. Cost of goods manufactured, $ ___?___ .
j. Cash sales to customers, $429,000.
k. Cost of goods sold (unadjusted), $ ____?____.
l. Cash payments to creditors, $35,000.
m. Under applied or over applied overhead $___?____.
Required:
1. Calculate the ending balances that would be reported on the company's balance sheet at March 31. You can derive your answers using Microsoft Excel and Exhibit 3A-2 as your guide, or you can use paper, pencil, and a calculator.
Exhibit 3A-2: Sapphire Company: Completed Transaction Analysis

2. Prepare Brooks Corporation's schedule of cost of goods manufactured for the month ended March 31. You can derive your answers using Microsoft Excel and Exhibit 3A-3 as your guide, or you can use paper, pencil, and a calculator.
Exhibit 3A-3: Sapphire Company: Schedule of Cost of Goods Manufactured

3. Prepare Brooks Corporation's schedule of cost of goods sold for the month ended March 31. You can derive your answers using Microsoft Excel and Exhibit 3A-4 as your guide, or you can use paper, pencil, and a calculator.
Exhibit 3A-4: Sapphire Company: Schedule of Cost of Goods Sold

4. Prepare Brooks Corporation's income statement for the month ended March 31. You can derive your answers using Microsoft Excel and Exhibit 3A-5 as your guide, or you can use paper, pencil, and a calculator.
Exhibit 3A-5: Sapphire Company: Income Statement

Transcribed Image Text:

Brooks Corporation Balance Sheet March 1 Assets Cash. Raw materials. Work in process Finished goods Prepaid expenses Property, plant, and equipment (net) Total assets $83,000 $18,000 14,000 22,000 54,000 1.800 175,000 $313.800 Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity $12,000 301,800 $313,800 Sapphire Company Transaction Analysis For the Month Ended January 31 Accounts Retained Cash Materials Pocess Goods Overhead Expenses PP&E (net)Payable Eornings 3,000 $240,000 4,000 $280,000 Raw Work in Finished Manufacturing Prepaid 5 Transoctions 6 Beginning balances 1/1 7 (a) Raw material purchases 8 (b) Raw materials used in production 9 c) Salaries and wages 10 (d) Utility costs 11 (e) Depreciation 12 (f) Advertising 13 (8) Expiration of prepaid insurance 14 (h) Manufacturing overhead applied $ 15,000 8,000 5,000 13,000 80,000 (78,000) 70,000 80,000 8,000 45,000 15,000 28,000 (135,000) 68,000 (22,000) 15,000 40,000) (12,000) (18,000) (200) (18,000) 800 1,000) (102,500) 10anufactured 102,500 (235,000 235,000 16 i Sales 17 (k) Cost of goods sold 18 Payments to creditors 19 (m) Overapplied overhead 20 Ending ballances 1/31 21 320,000 320,000 (245,000) 5,700 2,000 $200,000$ 7,000 $308,500 245,000) (92,000) (92,000) S 90,000 10,000 10500$ 3,000S Sapphire Company Schedule of Cost of Goods Manufactured For the Month Ended January 31 5 Direct materials 6 Beginning raw materials inventory (D6) 7 Add: Purchases of raw materials (D7) 8 Total raw materials available 9 Deduct: Ending raw materials inventory (D20) 10 Raw materials used production 11 Deduct: Indirect materials included in manufacturing overhead (G8) 12 Direct labor (E9) 13 Manufacturing overhead applied to work in process (E14) $ 8,000 80,000 88,000 10,000 78,000 8,000 $ 70,000 68,000 102,500 240,500 5,000 245,500 10,500 235,000 14 Total manufacturing costs 15 Add: Beginning work in process inventory (E6) 16 17 Deduct: Ending work in process inventory (E20) 18 Cost of goods manufactured 19 Sapphire Company Schedule of Cost of Goods Sold For the Month Ended January 31 2 15 Beginning finished goods inventory (F6) Add: Cost of goods manufactured (F15) 7 Cost of goods available for sale 8 Deduct: Ending finished goods inventory (F20) 9 Unadjusted cost of goods sold 10 Deduct: Overapplied overhead (G19) 11 Adjusted cost of goods sold 12 $ 13,000 235,000 248,000 3,000 245,000 5,700 $ 239,300 6 Sapphire Company Income Statement For the Month Ended January 31 2 5 Sales (L16) 6 Cost of goods sold 7 Gross margin 8 Selling and administrative expenses 9 Salaries expense (L9) 10 Depreciation expense (L11) 11 Advertising expense (L12) 12 Insurance expense (L13) 13 Net operating income 14 $ 320,000 239,300 80,700 $ 22,000 12,000 18,000 200 52,200 $ 28,500