Question
Alphine Products Inc uses a job-order cost system. The company's inventory balance on April1, the start of its fiscal year were as follows: Raw materials
Alphine Products Inc uses a job-order cost system. The company's inventory balance on April1, the start of its fiscal year were as follows:
Raw materials inventory$32,000
Work in porcess: $20,000
Finished goods: $48,000
During the year, the following transactions were completed:
a. Raw materials were purchased on account $170,000
b. Raw materials were issued from the storeroom for use in production, $180,000 (80% direct and 20% indirect)
c.Employee salaries and wages were accrued as follows(direct labour $200,000indirect labour $82,000 and selling and admin salaries $90,000)
d. Utility costs were incurred in the factory $65,000
e. Advertising costs were incurred $100,000
f. Prepaid insurance expired during the year$200,000 (90% factory, 10% office )
g. Amortization were recorded $180,000 (85% factory, 15% office)
h.Manufacturing overhead was applied to jobs at the rate 175% of the direct labour cost
i. Goods that cost $700,000 to manufacture according to their job cost sheets were transferred to finished goods warehouse
j Sales for the year totalled $1,000,000 and were all on account.The total cost to manufacture these goods was $720,000
Required:
1. Prepare journal entries to each transaction
2.Prepare the T-Account for raw materials, Work-in-process, finished goods, Manufacturing overhead and COGS
3.Is the manufacturing overhead under-applied or over-applied for the year? Prepare a journal entry to close the balance to COGS.
4.Prepare an income statement for the year.
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