Basic cost system; journal entries; financial statements. Similar to self-study problem.

Lo_3,4 The post-closing trial balance of Mountain Manufacturing Co. on April 30 is re-

produced as follows:

During the month of May, the following transactions took place:

a. Purchased raw materials at a cost of $45,000 and general factory supplies at a cost of $13,000 on account (recorded materials and supplies in the materials account).

b. Issued raw materials to be used in production, costing $47,000, and miscellaneous factory supplies, costing $15,000.

c. Recorded the payroll, the payments to employees, and the distribution of the wages and salaries earned for the month as follows: factory wages (including $12,000 indirect labor), $41,000, and selling and administrative salaries, $7,000. Additional account titles include Wages Payable and Payroll. (Ignore payroll withholdings and deductions.)

d. Recognized depreciation for the month at an annual rate of 5% on the building, 10% on the factory equipment, and 20% on the office equipment.
The sales and administrative staff uses approximately one-fifth of the building for its offices.

e. Incurred various other expenses totaling $11,000. One-fourth of this amount is allocable to the office function.

f. Transferred total factory overhead costs to Work in Process.
g. Completed and transferred goods with a total cost of $91,000 to the finished goods storeroom.
h. Sold goods costing $188,000 for $345,000. (Assume that all sales were made on account.)
i. Collected accounts receivable in the amount of $362,000.
j. Paid accounts payable totaling $158,000.
Required:
1. Prepare journal entries to record the transactions.
2. Set up T-accounts. Post the beginning trial balance and the journal entries prepared in (I) to the accounts and determine the balances in the accounts on May 31.
3. Prepare a statement of cost of goods manufactured,-an income statement, and a balance sheet. (Round amounts to the nearest whole dollar.)

Transcribed Image Text:

Mountain Manufacturing Co. Post-Closing Trial Balance April 30, 2002 Cash 25,000 Accounts Receivable Finished Goods 65,000 120,000 Work in Process 35,000 Materials .... 18,000 Building. 480,000 Accumulated Depr.-Building 72,000 Factory Equipment.... 220,000 Accumulated Depr.-Factory Equipment. 66,000 Office Equipment... 60,000 Accumulated Depr.-Office Equipment. 36,000 Accounts Payable. 95,000 Capital Stock. 250.000 Retained Earnings. 504,000 1,023,000 1,023,000