Charlie's Chocolate Factory Ltd . is based in Airdrie, Alberta. They manufacture parts and equipment for chocolatiers
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Question:
Charlie's Chocolate Factory Ltd is based in Airdrie, Alberta. They manufacture parts and equipment for chocolatiers and chocolate shops. Their trial balance as at January the start of their new fiscal year, is below.
Cash $
Accounts Receivable $
Raw Materials Inventory $
Work in Progress Inventory $
Finished Good Inventory $
Supplies Inventory $
Prepaid Expenses $
Property and Equipment $
Accumulated Depreciation $
Accounts Payable $
Staff Payroll and Wages Payable $
Common Shares $
Preferred Shares $
Retained Earnings $
Charlie's Chocolate Factory Ltd allocates manufacturing overhead costs to each project on the basis of direct labour hours. The senior management team estimates that they will incur $ in manufacturing overhead costs and will work direct labour hours during the fiscal year.
The following transactions took place throughout the fiscal year. Unless otherwise noted, the transactions were booked on account.
Raw materials inventory consists of stainless steel sheets, plastic molds and other assembly parts. A total of $ in raw materials were purchased on account.
Raw materials were issued into production in the amount of $
Accrued wages for factory staff amounted to $ Of this amount, was indirect labour. The remainder was direct labour. A total of
direct labour hours were worked during the year.
Selling and administrative payroll expenses were accrued in the amount of $
A total of $ in factory supplies were purchased on account during the year. Of the total ampunt in Supplies Inventory, $ were requisitioned into production.
Marketing expenses for the year were $
Depreciation expense for the year was $ related to factory buildings and equipment. The remainder related to office equipment.
Property tax expense for the year were $ Of this amount, related to the factory and related to the office.
Insurance expense for the fiscal year was $ The company allocates to the factory and the remainder to head office."
Manufacturing overhead expenses were applied to projects.
Projects completed during the year incurred total production costs of $ as tracked on the job cost sheets.
Revenue booked on account was $ Cost of Goods Sold were $
Required:
a Prepare the journal entries for the transactions incurred throughout the fiscal year. marks
b Prepare the Taccount for the Manufacturing Overhead account. marks
c Is Manufacturing Overhead overapplied or underapplied? Book the journal entry to close overapplied or underapplied Manufacturing Overhead to Cost of Goods Sold. marks
d Prepare the income statement as at December assuming an income tax rate of marks
e What is the total balance in Inventory on the December balance sheet? Be sure to show all of your work and supporting calculations! marks
Related Book For
Frank Woods Business Accounting An Introduction To Financial Accounting
ISBN: 9781292365435
15th Edition
Authors: Alan Sangster, Lewis Gordon, Frank Wood
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