\begin{tabular}{|r|l|} \hline 30 & Paid Paint To Go on account, $1,120 \\ \hline 30 & Purchased materials on acocunt from Lumber Unlimited, $4,300 \\ \hline \end{tabular} arkirmat thimkini Account Salaries Payable Account No Account Frank Thompson, Capital Acopunt No Account Frank Thompson, Drawing Account No. Account Sales Acoount No Acoount Cost of Goods Sold Account No. Account Finished Goods Account Equipment Account Accumulated Depreciation - Equipment Account Accounts Payable Account Employee's Federal Income Tax Payabie Account FICA TaxPayable Account FUTA Tax Payable Account SUTA Tax Payable Backyard Fun and Games Schedule of Accounts Payable (Accounts Payable Creditor Balances) January 1, 2021 Account Factory Overhead Account Advertising Expense Account Salaries Expense Acoount Rent Expense Account Payroll Tax Expense Account Utilites Expense GENERAL JOURNAL Pape 4 Account Materials Account Work in Process ACCOUNTS PAYABLE SUBSIDIARY LEDGER \begin{tabular}{|c|c|} \hline 8 & 8 \begin{tabular}{l} Received a check from Utopian Backyard Fun for $4,700 in partial payment of \\ their December 31 balance. \end{tabular} \\ \hline 10 & 0 Paid $400 for advertising for the rest of the month. \\ \hline 10 & Paid Lumber Unlimited $6,950 in payment of the December 31 balance. \\ \hline 14 & \begin{tabular}{l} Received a check from Backyard Game Treats for $4,200 in payment of their \\ December 31 balance. \end{tabular} \\ \hline 14 & \begin{tabular}{l} Sold a small Outdoor Word Game from inventory for cash, $380 cost, $532 \\ sales price. \end{tabular} \\ \hline 14 & \begin{tabular}{l} Sold 2 large Giant Jenga games, 2 medium and 1 large bean bag toss games, 1 \\ small and 1 medium Connect the Color games, and 3 large Falling Orb games \\ out of inventory to a cash customer. Retail price, $5,755.40. Our cost, \\ $4,111.00. \end{tabular} \\ \hline 14 & \begin{tabular}{l} Applied $80 of direct materials to job 126 (requisition number 60 ), applied \\ factory overhead at the rate given previously and applied $120 of direct labor \\ (time ticket 49 ) withholding taxes at the rates given previously. \\ This finished off the job so we transferred all costs from WIP into Finished \\ Goods. \end{tabular} \\ \hline 15 & \begin{tabular}{l} Recorded the sale of Job 126 to the cash customer reporting the sale at the \\ retail price of $672 and moving our cost of finished goods into Cost of Goods \\ Sold. \end{tabular} \\ \hline 15 & \begin{tabular}{l} Paid Utility bill, $510.85% for manufacturing area, 15% for nonmanufacturing \\ area. \end{tabular} \\ \hline 16 & \begin{tabular}{l} Added $1,150 of materials to job 125 (requisition number 61 ). Remember to \\ also apply factory overhead as shown earlier. Also added $1,462 of labor \\ (time ticket 50 ). Remember to withhold taxes as shown earlier. This finished \\ off job 125 . \end{tabular} \\ \hline 16 & \begin{tabular}{l} Sold job 125 to Oversize Games on account. Sales price is $8,010.80. \\ Determine our total cost from the job cost records. \end{tabular} \\ \hline \end{tabular} Frank Thompson operates a small business that manufactures oversized backyard games. He runs the business as a sole proprietorship. The company uses a job order cost system using a first-in, first-out (FIFO) inventory system. He purchases the materials that will be needed and then as customers place orders they cut the materials and assemble the games as specified in the order. He keeps some completed games on hand to sell to customers as well. As they purchase the materials they record them as an asset in an account called materials. They might be direct, or they might be indirect. As they need the materials they will either get debited to the Work in Process account (an asset, direct materials related to a specific job) or to Factory Overhead (indirect materials, related to all jobs). When jobs are completed, all costs related to them (direct materials, direct labor, applied factory overhead) will be combined to determine the total cost for the job and will be moved from the Work in Process account to Finished Goods (also an asset). Factory Overhead will be applied at 40% of Direct Material costs. When told to record the sale, you will record two entries - one for the sale at retail and one for the cost in the goods. Costs for any jobs in process on December 31 have been recorded on the job cost records. As new costs are incurred for those jobs or for any new jobs you will be required to update the appropriate job cost records for the specified jobs. These records will allow you to accumulate all costs related to each job to determine the total cost for that job. To help in the manufacturing process Frank has two employees who work on the production of the games. These wages are considered direct costs to the jobs. Plus, he has one employee that helps do the accounting work. That job is not related to production and is treated as a period cost. He pays all employees at the end of the month. Federal Income Tax is withheld at 15\% for all employees. FICA Tax is with ineld at 7.65% (combines both Social Security and Medicare). At this point the company does not have a retirement plan or insurance plan set up for its employees. We will be journalizing the transactions for the company for the month of January 2021. Provided for your reference is a Trial Balance dated January 1,2021 f beginning of this period, end of the previous period), a schedule of accounts receivable showing who owes us money and how much they owe us. A schedule of accounts payable showing who we owe money to and how much. The general ledger with the beginning balances filled in. And the necessary job cost record sheets. \begin{tabular}{|c|c|} \hline Jan2 & \begin{tabular}{l} 2 Paid rent for the month, $4,000 total, 85% for space devoted to manufacturing \\ the products, 15% for office space. \end{tabular} \\ \hline 2 & 2 Paid Hardware for All $879 in payment of the December 31 balance. \\ \hline 3 & \begin{tabular}{l} 3 Received a check from Fun For All Backyard Games for $1,230.00 in partial \\ payment of their December 31 balance. \end{tabular} \\ \hline 4 & 4 Purchased manufacturing supplies on account from Local Got It All, $325. \\ \hline 6 & \begin{tabular}{l} Sold a medium Giant Jenga game from inventory for Cash. Received $546. \\ Our cost was $390. \end{tabular} \\ \hline & \begin{tabular}{l} Received an order for a large Falling Orbs game from a cash customer. Set up \\ job 126. \\ Began working on the job by applying $120 of direct materials (requisition \\ number 59 ). Whenever we use direct materials on a job we will also apply \\ Factory Overhead at a rate of 40% of the direct materials cost. \\ We also applied $80 of direct labor (time ticket 48 ). \\ Whenever we have direct labor we will debit Work in Process (WIP) for the \\ total gross wages, credit Employees Federal Income Tax Payable for 15% of the \\ total direct labor, credit FICA Tax Payable for 7.65% of total direct labor, and \\ credit Salaries Payable for the difference to get total debits to equal total \\ credits. \\ If needed, always round your numbers to the nearest cent. If your answer \\ goes to three decimal places, if the third number on the right of the decimal is \\ 4 or lower drop off the numbers and leave the number in the cent place \\ (second number) as it is. If the third number is 5 or larger, round the second \\ number up 1 place. I.E. 128.914=128.91. 128.915=128.92 \end{tabular} \\ \hline 6 & \begin{tabular}{l} Paid Secondary Bank $8,798.40 for December 2020 payroll taxes as follows: \\ Employees' Federal Income Tax Payable $3,744.00 \\ FICA Tax Payable $1,909.44 \\ FUTA Tax Payable $149.76 \\ SUTA Tax Payable $2,995.20 \end{tabular} \\ \hline 7 & Purchased materials on account from Lumber Unlimited, \\ \hline \end{tabular} Backyard Fun and Games Schedule of Accounts Receivable (Accounts Receivable Customer Balances) January 1, 2021 Account numbers for assets will generally begin with a 1 . Liabilities with a 2 . Owner's Equity accounts with a 3. Revenue with a 4. And expenses with a 5. If you receive cash, cash is an asset, so you would debit it. If you are told to pay for something that should be a credit to cash. If you are not told that you paid or received cash then you didn't affect cash. It would presumably be accounts receivable or accounts payable. Based on chapter 6 , and also chapters 18 and 19 , if you are told you sold something you need to journalize 2 entries. One set of debits and credits to show the sale at the retall price. A second entry with a debit and credit to show our cost in the goods we sold. To keep track of our cost in the goods we sell there are job cost records. There was one job in process at the beginning of the month. Some costs from December have been recorded for that job. As we continue working on the job you will add additional costs to the job. Once you are told the job is completed you will add up all costs from December and January to determine the total cost of the job. For any new job we work on, that is given a job number, in additin to recording it in the journal we need to take the costs to the job costs records to keep track of the total costs for that job. In chapter 5, back in ACCT 200, we learned about control accounts such as accounts receivable and accounts payable, to allow us to keep track of the amounts related to specific businesses. The set has a subsidiary ledger for both of those accounts. If you use either account (accounts recelvable or accounts payable) in the general journal you would also record it in the appropriate subsidiary ledger. Remember, the balances in the accounts receivable subsidiary are presumed to be debits since that is an asset account and the balances in the accounts payable subsidiary are presumed to be credits because that is a lability account. If you are told to work with direct labor, indirect labor or nos marufacturing wages you will also need to withhold Employees federal income Tax at 15 s. of the gross wages. Withhold FICA Tax Pavable at the rote of 7.655, of gross wages. Credit Salaries Payable for the difference between gross wapes and each of the things withheld. The sales we make that indicate they are out of inventory have already been completed and the job cost records have been fully completed to get the numbers you are given to use. You do not need to do anything with them on the job cost records (so they were not provided). Backyard Fun and Games Trial Balance January 1, 2021 \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & & & JobC & ost Record & & & \\ \hline JobN & ber: & 126 & & & Date P & hised: & 1/18 \\ \hline Custo & Name: & Cash Cust & ner & & Date & & 1/6/2020 \\ \hline Job D & ription: & 1 large Fa & ng Orbs & & Date & pleted: & \\ \hline & Direct & Materials & Direct & Labor & & Eactory & ad \\ \hline Date & \begin{tabular}{l} Requisition \\ Number \end{tabular} & Amount & \begin{tabular}{l} Time Ticket \\ Numbers \end{tabular} & Amount & Date & Rate & Amount \\ \hline & & & & & & & \\ \hline & & & & & & & \\ \hline & & & & & & & \\ \hline & & & & & & & \\ \hline & & & & & & & \\ \hline & & & & & & Dverall Co & mary \\ \hline & & & & & Direct & terials & \\ \hline & & & & & Direct & & \\ \hline & & & & & Facto & verhead & \\ \hline & & & & & Total & & \\ \hline \end{tabular} ACCOUNTS RECEIVABLE SUBSIDIARY LEDGER \begin{tabular}{|c|c|} \hline 17 & \begin{tabular}{l} Received an order for a medium bean bag game from a cash customer. Set up \\ job 127 . Began working on the job by applying $40 of direct materials \\ (requisition number 62 ), applying factory overhead, and applying $20 of direct \\ labor (time ticket 51 ) withholding the appropriate taxes. \end{tabular} \\ \hline 21 & \begin{tabular}{l} Received an order for 3 large Falling Orbs and 2 Medium Falling Orbs from Fun \\ For All Backyard Games. Set up job 128. Began working on the job by applying \\ $220 of direct materials (requisition number 63 ), apply factory overhead, and \\ $410 of direct labor (time ticket number 52 ) withholding taxes. \end{tabular} \\ \hline 21 & \begin{tabular}{l} Sold 2 large Giant Jenga games and 1 large Falling Orbs game to a cash \\ customer from inventory. Our cost is $870. Sales price is $1,218. \end{tabular} \\ \hline 21 & \begin{tabular}{l} Received a check from Oversize Games for $3,290 in payment of their \\ December 31 balance. \end{tabular} \\ \hline 21 & Used materials on hand to work on all jobs currently in process, $217 \\ \hline 23 & \begin{tabular}{l} Purchased paint and stain (direct materials) from Paint To Go on account, \\ $692. \end{tabular} \\ \hline 27 & \begin{tabular}{l} Set up bookkeeper salary, $960 for the month, indicate withholding for federal \\ income tax and FICA. Withhold payroll taxes at the same rate we used for \\ direct labor transactions. \end{tabular} \\ \hline 30 & \begin{tabular}{l} Set up employer payroll taxes for both manufacturing employees and \\ nonmanufacturing employees. Debit Factory Overhead 365.06 ; Debit Payroll \\ Tax Expense 167.52; credit FICA Tax Payable 233.48; credit FUTA Tax Payable \\ 24.42; credit SUTA Tax Payable 274.68. \end{tabular} \\ \hline 30 & Paid all employees for wages earned in January. \\ \hline 30 & Owner withdrew $3,200 for personal use. \\ \hline 30 & Received $1,015.60 on account from Fun For All Backyard Games \\ \hline 30 & Received $2,650 on account from Utopian Backyard Fun \\ \hline 30 & Paid Local Got It All on account, $325 \\ \hline 30 & Paid Lumber Unlimited on account, $9,700 \\ \hline \end{tabular} GENERAL JOURNAL. Page 2 GENERAL JOURNAL BACKYARD FUN AND GAMES Chart of Accounts ASSETS Current Assets 100 Cash 111 Accounts Receivable 117 Materials 118 Work in Process 119 Finished Goods Property, Plant \& Equipment 150 Equipment 151 Accumulated Depreciation - Equip LIABILITIES Current Liabilities 210 Accounts Payable 214 Employee's Federal Income Tax Payable 215 FICA Tax Payable 217 FUTA Tax Payable 218 SUTA Tax Payable 219 Salaries Payable REVENUE 410 Sales COST OF GOODS SOLD (COGS) 510 Cost of Goods Sold 511 Factory Overhead OPERATING EXPENSES 610 Advertising Expense 620 Salaries Expense 650 Rent Expense 670 Payroll Tax Expense 685 OWNERS' EQUITY 310 Frank Thompson, Capital 311 Frank Thompson, Drawing CFAICDAI Initnein : arnirmat thimkini Account Cash Account Accounts Receivable BACKYARD FUND AND GAMES Unadjusted Trial Balance January 31,2021 What to do: Journalize each transaction located in the "Transaction" tab at the bottom of the excel file in the general journal. Remember only use proper accounts names (use the chart of accounts tab to help you find the avaliable account names) and each transaction must have total debits equal to total credits. As you joumalize you also need to record any entry affecting accounts receivable or accounts payable in their subsidiaries. We learned this in chapter 5 . Also, if you affect a specific job (you will be given a job number) you need to record that in the job cost records in addition to recording it in the general journal. Once you have journalized all of the transactions you need to post from the general journal into the general ledger. In the ledger you would use J1,12,13 etc. for the post reference number showing which journal and page number you got the information. Then you go back to the journal and fill in the account number from the ledger where you posted it. Finally, prepare an unadjusted trial balance. Things to think about as you work the set: As you begin working on the practice set it is important to remember the basic concepts we learned in ACCT 200 and also the new concepts from chapters 18 and 19. If you are told that you are doing something relating to just the current month in the nonmanufacturing part of the business, you would look for a current asset or an expense account. If you are told to do something that relates to the manufacture of the games we produce you would use Work in Process for Direct Materials, Direct:Labor, or applying Factory Overhead. You would be given a job number to know that is is a direct cost. If you are told to do something that relates to the manufacture of the games we produce but it relates to all jobs, or the manufacturing process as a whole, you would use Factory Overhead. You would not be given a job number. Remember the basics of debits and credits. A debit will increase assets, drawing or expense accounts, Credits will increase liabilities, capital or tevenue accounts