Accounting Information Systems ACCT 3320 Watson Cycle Project #4 Part A: Journal Entries ou work for a small accounting firm that provides compilation services for small businesses. One of your clients is Molder of Dreams (MOD), which custom manufactures custom plastic items. At the end of each month, MOD sends you their journal entries, trial balance, and source documents. The bookkeeper MOD is the owner's wife, and she doesn't really know much about accounting. Therefore, you start by making corrections to their journal entries to arrive at a corrected trial balance. Stuff to know about MOD's operations: The process for MOD is (1) to create a mold to the client's specifications, (2) melt plastic pellets and dye them to color specifications, and (3) inject them into the molds. When the plastic re-hardens, the item is complete. MOD uses Job Order Costing. The only direct material is the plastic pellets. All other materials are considered overhead. Because all jobs are special orders, there is no finished goods. I finished job is automatically considered sold MOD uses LIFO to account for material inventory. MOD's only employee is the owner Fox Skully. (His wife Dana Skully, the bookkeeper, doesn't get paid.) Fox receives $3500 per month in salary paid on the 15th, which includes administrative duties and work for the client (billed at $25/hour). Payroll is processed by a payroll company who send them a payroll report. Dana writes the check and enters the entry into the system. (Hint: payroll entries should reverse wages payable from last month. The rest is salary.] In the attached documents, you will find the following: 1. November's Trial Balance (You may assume this is correct as your company has already done the work for Nov.) 2. December's Trial Balance (This is the first time you are seeing the Dec Trial Balance that was prepared by Dana.) 3. MOD's December General Journal 4. MOD's Source Documents Your Responsibility Examine the journal entries made by MOD. If you believe one is incorrect, you must correct it. You cannot change an journal entry in MOD's system. To make a correction, you must create entries that brings the GL accounts to the correct balance. There are two ways to do this: 2 entries: You can reverse the wrong entry and then write a new entry (easier, but more posting) 1 entry: You can write one entry that just makes a correction (harder, but less posting) Other info you might need: The invoice for Material Matters on 12/15 is for indirect materials, not supplies The check on 12/12 was written for the right amount and recorded for the wrong amount. If you need a refresher on payroll entries, check out Module 3 > Calculating Payroll Check Figures for corrected Trial Balance Total debits = 5224,764.44 Material Inventory = $498.80 Accounts Payable = $957.50 Documents to submit 1. Corrected December Trial Balance 2. Your correcting entries Molder of Dreams al Journal for the month of December 2014 Date Account 450.00 520.00 12/2 Materials inventory Accounts Payable 1273 Vehicle Expense 869.981 12/6 7,000.00 Paid monthly rent 450.00 Pellets inclinvoice 685412 520.00 Monthly payment for auto loan 8699 Received payment from Customer 101 7.00000 Work done on Job X4-1201 in D 294.00 250.00 600.ool Cash Accounts Receivable Jobs in Process Materials inventory Wages Payable 12/8 12/8 Shipping Expense 200,00 Cash 200.00 Completed 3.500.00 350.00 200.00l 1.414.00 12/8 Accounts Receivable Sales Revenue Sales Tax Payable Shipping Expense Cost of Sales Jobs in Process 12/9 Accounts Payable Cash 12/10 Bad Debt Expense Accounts Receivable 12/12 Material Inventory 122.341 430.00 1.200.00 1.414.00 Pald phone be received last month 122.34 Wrote off dient 103 who passed away 430.00 Paid Pellets Inc Invoice 85107 1,200.00 Work done on Job X4-1202 in December 343.00 450.00 Cash 1.493.00 200.00 200.00 5.150.00 Completed lob X4-1202 4,500.00 450.00 1.493.00 1,493.00 Monthly payroll 2,874.33 I 12/13 Jobs in Process Materials Inventory Wages Payable Overhead 12/13 Shipping Expense Cash 12/13 Accounts Receivable Sales Revenue Sales Tax Payable Shipping Expense Cost of Sales Jobs in Process 12/15 Salary Expense Cash 12/15 Supplies Expense Shipping Expense Accounts Payable 12/21 Jobs in Process Materials Inventory Wares Pavable Overhead 12/22 Miscellaneous Expense Cash 12/23 Facility Expense Cash Material Matters Invoice #20X4-8974 412.50 25.00 2,004.80 437.50 Work done on Job X4-1203 in December 514.80 500.00 234.25 |Parts2You Invoice #R45-9 234.25 Paid electric bill received this month 293.86 293.86 Molder of Dreams Trial Balance November 30, 20X4 Molder of Dreams Trial Balance December 30, 20X4 Debit Credit Notes 129569 13,511,63 13,700.00 11.930.00 See subsidiary below 500.00 See LIFO records Overhead Rate = $1 per pound materials 1,127.50 0.00 4.723.60 1,60400 1.350.00 45,000.00 1.695.70 1,734 80 2433.60 1.804.00 1350.00 45,000.00 14.500.00 9.600.00 9,500.00 Accounts Receivable Allowance for Doubtful Accounts Material Inventory Jobs in Process Overhead Supplies Prepaid Insurance Delivery Truck Accum, Depr.-Truck Equipment Accum, Depe, Equipment Accounts Payable Salary & Wage Payable FICA Payable Fed Inc Tax Payable State Inc Tax Payable Sales Tax Payable Auto Loan Payable Common Stock Retained Earnings Dividends Sales Revenue Cost of Sales ad Debt Expense Jepreciation Expense Facilities Expense Interest Expense Payroll Tax Expense Salary & Wage Expense Shipping Expense Supplies Expense Vehicle Expense Miscellaneous Expense Total 3.680.00 822.09 1.750.00 1,107.00 378.00 337 84 2,100.00 33.585.67 10,000.00 5,953 31 5 months (Dec-May Purchased 7/3/20X3 14,500.00 UOA Depr. 100,000 miles SV $2000 Purchased 1/1/20X3 3,680.00 SL Depr, 5 yr life; SV=$0 1,667.25 Sto subsidiary below 2,950.00 1.107.00 378.00 337 84 2.900.00 Sales Tax Rate 10% 33,585.67 Payment-$869.98; due 3rd ea month; 6% APR 10.000.00 5.953.31 11.00000 11,000.00 141.900.00 149.900.00 Includes rent, utilities, insurance, etc. 41.151.00 500.00 11,760.00 10.089.58 2,073.96 3.307 50 36.750.00 0.00 2,340.96 3.223.56 6,125.86 216,61391 44,058.00 930,00 11.760.00 10.833.44 2.073.95 3.307 50 39.624.33 25.00 2.753 46 4,093,54 6.360.11 227.449.07 216.613.91 227 449.07 AR Subsidiary: Customer 101 (current) Customer 102 (current) Customer 103 (90 days late) 7,000.00 4,500.00 430.00 AP Subsidiary: Pellets Inc (Invoice 85107) Parts2You (Invoice #R45-9) Phone Company 465.50 234 25 122.34 This is right! Pellet Inventory Date 9/30/X4 10/15/X4 In Stock Pounds Cost/lb 700 0.50 650 0.48 Total Cost Job Date 350.00 X4-1201 12/8/X4 312.00 X4-1202 12/13/X4 465.50 X4-1203 12/21/X4 520.00 Used Pounds Cost/lb 600 0.49 700 0.44 990 0.52 Total Cost 244.00 343.00 514.80 12/2/X4 1000 0.52 Pellets Inc 123 Main Street Pittsburgh PA 15106 Invoice: 85412 Date: 11/30/20X4 Terms: net 30 Ship To: Molder of Dreams 201 Donaghey Conway AR 72035 lItems Dyeable pellets (by the pound) Quan 1000 Price 0.52 Ext 520.00 Subtotal Sales Tax Shipping Total 520.00 0.00 0.00 520.00 Material Matters 258 Frontage Road Little Rock, AR 72209 Invoice Number 20X4-8974 Date 12/15/20X4 Terms: net 30 Ship To: Molder of Dreams 201 Donaghey Conway AR 72035 Quan Ext 40 40.00 Items Item 236a4 Item 2514b39 Item 74ar9 Item 99 60 200 Price 1.00 2.25 0.50 100 100 Subtotal) Sales Tax Shipping Total 375.00 37.50 25.00 437.50 Molder of Dreams Materials Date Quantity 12/8/X4 600 Job Cost Sheet Job: X4-1201 Wages (525/hr) Overhead ($1/lb of materials) Date Quantity Cost Date Quantity Cost 12/8/X4 10 250.00 12/8/X4 600 600.00 Cost 294.00 Subtotal 294.00 600.00 1,144.00 Subtotal 250.00 Subtotal Job Total Cost For Customer Billing Sales Tax 3 50.00 Shipping Total Due from Customer Selling Price 3500.00 200.00 4050.00 Molder of Dreams Materials Date Quantity Cost 12/13/X4 700 3 43.00 Job Cost Sheet Job: X4-1202 Wages ($25/hr) Overhead ($1/lb of materials) Date Quantity Cost Date Quantity Cost 12/13/X4 18 450.00 12/13/%4 700 Subtotal 343.00 Subtotall 450.00 Subtotal 700.00 Job Total Cost 1,493.00 For Customer Billing Sales Tax 450.00 ShippingL200.00 Total Due from Customer 5150.00 Selling Price 4500.00 Molder of Dreams Materials Date Quantity 12/21/24 990 Job Cost Sheet Job: X4-1203 Wages ($25/hr) Overhead ($1/lb of materials) Cost Date Quantity Cost Date Quantity Cost 514.80 12/21/X4 20 500.00|12/21/X4 990 990,00 Subtotal Subtotal Subtotal Job Total Cost Selling Price For Customer Billing Sales Tax Shipping Total Due from Customer PayDay Processors Payroll Report Company Molder of Dreams Payee Fox Skully Date 12/15/20X4 Gross Pay Salary Paycheck Deductions 3500.00 FICA Federal Income Tax State Income Tax 267.75 189.00 168.92 Total 3500.00 Total Net Pay 625.67 2874.33 Employer Taxes FICA-Match FUTA SUTA 267.75 0.00 3.75 271.50 Total Total Cost of Payee Total 3145.83 Accounting Information Systems ACCT 3320 Watson Cycle Project #4 Part A: Journal Entries ou work for a small accounting firm that provides compilation services for small businesses. One of your clients is Molder of Dreams (MOD), which custom manufactures custom plastic items. At the end of each month, MOD sends you their journal entries, trial balance, and source documents. The bookkeeper MOD is the owner's wife, and she doesn't really know much about accounting. Therefore, you start by making corrections to their journal entries to arrive at a corrected trial balance. Stuff to know about MOD's operations: The process for MOD is (1) to create a mold to the client's specifications, (2) melt plastic pellets and dye them to color specifications, and (3) inject them into the molds. When the plastic re-hardens, the item is complete. MOD uses Job Order Costing. The only direct material is the plastic pellets. All other materials are considered overhead. Because all jobs are special orders, there is no finished goods. I finished job is automatically considered sold MOD uses LIFO to account for material inventory. MOD's only employee is the owner Fox Skully. (His wife Dana Skully, the bookkeeper, doesn't get paid.) Fox receives $3500 per month in salary paid on the 15th, which includes administrative duties and work for the client (billed at $25/hour). Payroll is processed by a payroll company who send them a payroll report. Dana writes the check and enters the entry into the system. (Hint: payroll entries should reverse wages payable from last month. The rest is salary.] In the attached documents, you will find the following: 1. November's Trial Balance (You may assume this is correct as your company has already done the work for Nov.) 2. December's Trial Balance (This is the first time you are seeing the Dec Trial Balance that was prepared by Dana.) 3. MOD's December General Journal 4. MOD's Source Documents Your Responsibility Examine the journal entries made by MOD. If you believe one is incorrect, you must correct it. You cannot change an journal entry in MOD's system. To make a correction, you must create entries that brings the GL accounts to the correct balance. There are two ways to do this: 2 entries: You can reverse the wrong entry and then write a new entry (easier, but more posting) 1 entry: You can write one entry that just makes a correction (harder, but less posting) Other info you might need: The invoice for Material Matters on 12/15 is for indirect materials, not supplies The check on 12/12 was written for the right amount and recorded for the wrong amount. If you need a refresher on payroll entries, check out Module 3 > Calculating Payroll Check Figures for corrected Trial Balance Total debits = 5224,764.44 Material Inventory = $498.80 Accounts Payable = $957.50 Documents to submit 1. Corrected December Trial Balance 2. Your correcting entries Molder of Dreams al Journal for the month of December 2014 Date Account 450.00 520.00 12/2 Materials inventory Accounts Payable 1273 Vehicle Expense 869.981 12/6 7,000.00 Paid monthly rent 450.00 Pellets inclinvoice 685412 520.00 Monthly payment for auto loan 8699 Received payment from Customer 101 7.00000 Work done on Job X4-1201 in D 294.00 250.00 600.ool Cash Accounts Receivable Jobs in Process Materials inventory Wages Payable 12/8 12/8 Shipping Expense 200,00 Cash 200.00 Completed 3.500.00 350.00 200.00l 1.414.00 12/8 Accounts Receivable Sales Revenue Sales Tax Payable Shipping Expense Cost of Sales Jobs in Process 12/9 Accounts Payable Cash 12/10 Bad Debt Expense Accounts Receivable 12/12 Material Inventory 122.341 430.00 1.200.00 1.414.00 Pald phone be received last month 122.34 Wrote off dient 103 who passed away 430.00 Paid Pellets Inc Invoice 85107 1,200.00 Work done on Job X4-1202 in December 343.00 450.00 Cash 1.493.00 200.00 200.00 5.150.00 Completed lob X4-1202 4,500.00 450.00 1.493.00 1,493.00 Monthly payroll 2,874.33 I 12/13 Jobs in Process Materials Inventory Wages Payable Overhead 12/13 Shipping Expense Cash 12/13 Accounts Receivable Sales Revenue Sales Tax Payable Shipping Expense Cost of Sales Jobs in Process 12/15 Salary Expense Cash 12/15 Supplies Expense Shipping Expense Accounts Payable 12/21 Jobs in Process Materials Inventory Wares Pavable Overhead 12/22 Miscellaneous Expense Cash 12/23 Facility Expense Cash Material Matters Invoice #20X4-8974 412.50 25.00 2,004.80 437.50 Work done on Job X4-1203 in December 514.80 500.00 234.25 |Parts2You Invoice #R45-9 234.25 Paid electric bill received this month 293.86 293.86 Molder of Dreams Trial Balance November 30, 20X4 Molder of Dreams Trial Balance December 30, 20X4 Debit Credit Notes 129569 13,511,63 13,700.00 11.930.00 See subsidiary below 500.00 See LIFO records Overhead Rate = $1 per pound materials 1,127.50 0.00 4.723.60 1,60400 1.350.00 45,000.00 1.695.70 1,734 80 2433.60 1.804.00 1350.00 45,000.00 14.500.00 9.600.00 9,500.00 Accounts Receivable Allowance for Doubtful Accounts Material Inventory Jobs in Process Overhead Supplies Prepaid Insurance Delivery Truck Accum, Depr.-Truck Equipment Accum, Depe, Equipment Accounts Payable Salary & Wage Payable FICA Payable Fed Inc Tax Payable State Inc Tax Payable Sales Tax Payable Auto Loan Payable Common Stock Retained Earnings Dividends Sales Revenue Cost of Sales ad Debt Expense Jepreciation Expense Facilities Expense Interest Expense Payroll Tax Expense Salary & Wage Expense Shipping Expense Supplies Expense Vehicle Expense Miscellaneous Expense Total 3.680.00 822.09 1.750.00 1,107.00 378.00 337 84 2,100.00 33.585.67 10,000.00 5,953 31 5 months (Dec-May Purchased 7/3/20X3 14,500.00 UOA Depr. 100,000 miles SV $2000 Purchased 1/1/20X3 3,680.00 SL Depr, 5 yr life; SV=$0 1,667.25 Sto subsidiary below 2,950.00 1.107.00 378.00 337 84 2.900.00 Sales Tax Rate 10% 33,585.67 Payment-$869.98; due 3rd ea month; 6% APR 10.000.00 5.953.31 11.00000 11,000.00 141.900.00 149.900.00 Includes rent, utilities, insurance, etc. 41.151.00 500.00 11,760.00 10.089.58 2,073.96 3.307 50 36.750.00 0.00 2,340.96 3.223.56 6,125.86 216,61391 44,058.00 930,00 11.760.00 10.833.44 2.073.95 3.307 50 39.624.33 25.00 2.753 46 4,093,54 6.360.11 227.449.07 216.613.91 227 449.07 AR Subsidiary: Customer 101 (current) Customer 102 (current) Customer 103 (90 days late) 7,000.00 4,500.00 430.00 AP Subsidiary: Pellets Inc (Invoice 85107) Parts2You (Invoice #R45-9) Phone Company 465.50 234 25 122.34 This is right! Pellet Inventory Date 9/30/X4 10/15/X4 In Stock Pounds Cost/lb 700 0.50 650 0.48 Total Cost Job Date 350.00 X4-1201 12/8/X4 312.00 X4-1202 12/13/X4 465.50 X4-1203 12/21/X4 520.00 Used Pounds Cost/lb 600 0.49 700 0.44 990 0.52 Total Cost 244.00 343.00 514.80 12/2/X4 1000 0.52 Pellets Inc 123 Main Street Pittsburgh PA 15106 Invoice: 85412 Date: 11/30/20X4 Terms: net 30 Ship To: Molder of Dreams 201 Donaghey Conway AR 72035 lItems Dyeable pellets (by the pound) Quan 1000 Price 0.52 Ext 520.00 Subtotal Sales Tax Shipping Total 520.00 0.00 0.00 520.00 Material Matters 258 Frontage Road Little Rock, AR 72209 Invoice Number 20X4-8974 Date 12/15/20X4 Terms: net 30 Ship To: Molder of Dreams 201 Donaghey Conway AR 72035 Quan Ext 40 40.00 Items Item 236a4 Item 2514b39 Item 74ar9 Item 99 60 200 Price 1.00 2.25 0.50 100 100 Subtotal) Sales Tax Shipping Total 375.00 37.50 25.00 437.50 Molder of Dreams Materials Date Quantity 12/8/X4 600 Job Cost Sheet Job: X4-1201 Wages (525/hr) Overhead ($1/lb of materials) Date Quantity Cost Date Quantity Cost 12/8/X4 10 250.00 12/8/X4 600 600.00 Cost 294.00 Subtotal 294.00 600.00 1,144.00 Subtotal 250.00 Subtotal Job Total Cost For Customer Billing Sales Tax 3 50.00 Shipping Total Due from Customer Selling Price 3500.00 200.00 4050.00 Molder of Dreams Materials Date Quantity Cost 12/13/X4 700 3 43.00 Job Cost Sheet Job: X4-1202 Wages ($25/hr) Overhead ($1/lb of materials) Date Quantity Cost Date Quantity Cost 12/13/X4 18 450.00 12/13/%4 700 Subtotal 343.00 Subtotall 450.00 Subtotal 700.00 Job Total Cost 1,493.00 For Customer Billing Sales Tax 450.00 ShippingL200.00 Total Due from Customer 5150.00 Selling Price 4500.00 Molder of Dreams Materials Date Quantity 12/21/24 990 Job Cost Sheet Job: X4-1203 Wages ($25/hr) Overhead ($1/lb of materials) Cost Date Quantity Cost Date Quantity Cost 514.80 12/21/X4 20 500.00|12/21/X4 990 990,00 Subtotal Subtotal Subtotal Job Total Cost Selling Price For Customer Billing Sales Tax Shipping Total Due from Customer PayDay Processors Payroll Report Company Molder of Dreams Payee Fox Skully Date 12/15/20X4 Gross Pay Salary Paycheck Deductions 3500.00 FICA Federal Income Tax State Income Tax 267.75 189.00 168.92 Total 3500.00 Total Net Pay 625.67 2874.33 Employer Taxes FICA-Match FUTA SUTA 267.75 0.00 3.75 271.50 Total Total Cost of Payee Total 3145.83
