Christopher's Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs.

Inventory balances at the beginning of the current year follow:

The following transactions occurred during January:

a$.$ Purchased materials on account for $$26,300.$

b$.$ Issued materials to production totaling $$21,000,90$ percent of which was traced to specific jobs and the remainder of which was

treated as indirect materials.

c$.$ Payroll costs totaling $$17,600$ were recorded as follows:

$$12,000$ for assembly workers

$$2,100$ for factory supervision

$$1,900$ for administrative personnel

$$1,600$ for sales commissions

d$.$ Recorded depreciation: $$4,400$ for factory machines, $$1,300$ for the copier used in the administrative office.

e$.$ Recorded $$1,200$ of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as

an administrative expense.

f$.$ Paid $$6,300$ in other factory costs in cash.

g$.$ Applied manufacturing overhead at a rate of $200$ percent of direct labor cost.

h$.$ Completed all jobs but one; the job cost sheet for the uncompleted job shows $$2,200$ for direct materials, $$2,300$ for direct labor,

and $$4,600$ for applied overhead.

i$.$ Sold jobs costing $$51,400.$ The revenue earned on these jobs was $$66,820.$

Required:

Set up T$-$accounts, record the beginning balances, post the January transactions, and compute the final balance for the following

accounts:

a$.$ Raw Materials Inventory.

b$.$ Work in Process Inventory.

c$.$ Finished Goods Inventory.

d$.$ Cost of Goods Sold.

e$.$ Manufacturing Overhead.

f$.$ Selling, General, and Administrative Expenses.

g$.$ Sales Revenue.

Determine how much gross profit the company would report during the month of January before any adjustment is made for the

overhead balance.

Determine the amount of over$-$ or underapplied overhead.

Compute adjusted gross profit assuming that any over$-$ or underapplied overhead balance is adjusted directly to Cost of Goods

Sold.