Production Company produces gadgets for the coveted small appliance market. The following data reflect activity for the most recent year, 2012:

Costs incurred

Purchases of direct materials (net) on account.....$124,000

Direct manufacturing labour cost........... 80,000

Indirect labour ................... 54,500

Amortization, factory equipment.......... 30,000

Amortization, office equipment.......... 7,000

Maintenance, factory equipment.......... 20,000

Miscellaneous factory overhead.......... 9,500

Rent, factory building................ 70,000

Advertising expense............... 90,000

Sales commissions............... 30,000

Beginning and ending inventories for the year were as follows:

Production Company uses a normal job-costing system and allocates overhead to work-in-process at a rate of $2.50 per direct manufacturing labour dollar. Indirect materials are insignificant, so there is no inventory account for indirect materials.
REQUIRED
1. Prepare journal entries to record the 2012 transactions including an entry to close out over-allocated or underallocated overhead to cost of goods sold. For each journal entry, indicate the source document that would be used to authorize each entry. Also note which subsidiary ledger, if any, should be referenced as backup for the entry.
2. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold, Manufacturing Overhead Control, and Manufacturing Overhead Allocated accounts.

Transcribed Image Text:

January 1, 2012 Direct materials Work-in-process Finished goods S9,000 6,000 69,000 December 31, 2012 $11,000 21,000 24,000