Overview of General-Ledger Relationships Frantic Publishing Company has its own printing facilities. Frantic uses a job-order accounting system and normal costing. Its president has interviewed you recently. As a graduate of a correspondence school in accountancy, he has a long-standing suspicion of accounting courses as being too general. He commented, “Most students learn high-blown theory, but when they are confronted by a few basic facts pro- duced by an accounting system, they can’t piece them together. If they don’t understand such fundamental relationships, they can’t possibly use the data intelligently.”

Because of his suspicions he has prepared an entrance examination for all prospective employees who seek a Frantic management position. He pro- vides them with the following data for the year 19_2 (in thousands of dollars):

Accounts receivable 1/1 65 Plant depreciation cost 130 Accounts receivable 12/31 100 Direct labor 420 Accounts payable 1/1 35 Factory heat and light cost 40 Accounts payable 12/31 40 Gross profit* 350 Stores inventory 1/1 70 Indirect labor 100 Stores inventory 12/31 60 Purchases of direct materials Finished goods 1/1 50 and supplies 400 Finished goods 12/31 250 Sales 1,230 Accrued payroll 1/1 20 Supplies used 30 Accrued payroll 12/31 70 Work in process inventory 12/31 110 * This is after a separate correction (after cost of goods sold) has been made for overapplied factory overhead of 20.
The president asks you to compute the following. He says, “Use any technique you wish, but leave an audit trail so I can follow your work.” You may use T-accounts if you wish.
. Direct-material usage.
- Cost of goods sold (at normal cost).
- Cost of goods completed and transferred to finished goods (at normal cost).
. Factory overhead applied.
Work in process, January 1, 19_2. lop4