Dawson Food Company makes frozen vegetables. Production involves two departments, processing and packaging. Raw materials are cleaned and cut in the processing department and then transferred to the packaging department where they are packaged and frozen. The following transactions apply to Dawson's first year (2018) of operations. (Assume that all transactions are for cash unless otherwise stated.)
1. The company was started when it acquired $160,000 cash from the issue of common stock.
2. Dawson purchased $42,000 of direct raw materials and $8,000 of indirect materials. Indirect materials are capitalized in the Production Supplies account.
3. Direct materials totaling $38,000 were issued to the processing department.
4. Labor cost was $77,000. Direct labor for the processing and packaging departments was $32,500 and $25,500, respectively. Indirect labor costs were $19,000.
5. The predetermined overhead rate was $0.80 per direct labor dollar in each department.
6. Actual overhead costs other than indirect materials and indirect labor were $22,500 for the year.
7. The processing department transferred $60,500 of inventory to the packaging department.
8. The packaging department transferred $70,000 of inventory to finished goods.
9. The company sold inventory costing $63,000 for $117,500.
10. Selling and administrative expenses were $23,500.
11. A physical count revealed $3,000 of production supplies on hand at the end of 2018.
12. Assume that over- or under applied overhead is insignificant.
Required
a. Record the data in T-accounts.
b. Record the closing entry for over- or under applied manufacturing overhead, assuming that the amount is insignificant.
c. Close the revenue and expense accounts.
d. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2018.