Cottage Construction, Inc. is a home builder in Arizona Cottage uses a job order costing system in which each house is a job. Because it constructs houses, the company uses an account titled Construction Overhead The company applies overhead based on estimated direct labor costs For the year, it estimated construction overhead of $1,050,000 and total direct labor cost of $2,625,000 The following events occurred during August Click the icon to view the events.) Read the requirements amo Requirement 1. Calculate Cottage's predetermined overhead allocation rate for the year Predetermined overhead allocation rate % Requirement 2. Prepare journal entries to record the events in the general journal (Record debits first, then credits Exclude explanations from any journal entries) a. Purchased materials on account, $420,000 Date 8. Accounts Debit Credit More info a. Purchased materials on account, $420,000 b. Requisitioned direct materials and used direct labor in construction. Recorded the materials requisitioned Direct Materials House 402 S House 403 House 404 House 405 Direct Labor 55,000 $ 48,000 67,000 38,000 66,000 55,000 86,000 54,000 c. The company incurred total wages of $280,000. Use the data from Item b to assign the wages. Wages are not yet paid d. Depreciation of construction equipment, $6,500 e. Other overhead costs incurred. Equipment rentals paid in cash, $32,000; Worker liability insurance expired, $5,000 f. Allocated overhead to jobs. g. Houses completed: 402, 404 h. House sold on account: 404 for $270,000 Requirements 1. Calculate Cottage's predetermined overhead allocation rate for the year. 2. Prepare journal entries to record the events in the general journal. 3. T-accounts for Work-in-Process Inventory and Finished Goods Inventory have been opened for you. Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero. 4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work-in-Process Inventory account. 5. Add the costs of the completed house that has not yet been sold, and show that this equals the ending balance in Finished Goods Inventory. 6. Compute gross profit on the house that was sold. What costs must gross profit cover for Cottage Construction? Requirement 1. Calculate Cottage's predetermined overhead allocation rate for the year. Predeterm alloca Actual direct labor cost Actual overhead cost Estimated direct labor cost Estimated overhead cost o record the events in the general journal. (Record debits 000. Accounts Debit Accounts Payable Accounts Receivable Accumulated Depreciation-Equipment stru Co ost icc Cash uire ma Construction Overhead Cost of Goods Sold Finished Goods Inventory Prepaid Insurance Raw Materials Inventory costi estima D Cash Construction Overhead Cottage Constru Cost of Goods Sold ccount titled Co irect labor cost Finished Goods Inventory (Click the icc Read the require Prepaid Insurance Raw Materials Inventory . Purchased ma Sales Revenue Date a. Wages Payable Work-in-Process Inventory costing: estimated Deb a. Purchased materials on account, $420,000 Date a. Accounts Debit Credit b. Requisitioned direct materials and used direct labor in construction Record the materials requisitioned. Date b. Accounts Debit Credit c. The company incurred total wages of $280,000 Use the data from Item b to assign the wages (Assume the wages have not been pain we company way we ou em tonyn on muy muy in prese Date Accounts Debit Credit C. d. Depreciation of construction equipment, $6,500 Date d. Accounts Debit Credit e. Other overhead costs incurred Equipment rentals paid in cash, $32,000. Worker liability insurance expired, $5,000. (Prepare a single jour Date Accounts Debit Credit K Cottage Construction, Inc. is a home builder in Arizona. Cottage uses a job order costing system in which each house is a job. Because it constructs houses, the e. Other overhead costs incurred: Equipment rentals paid in cash, $32,000, Worker liability insurance expired, $5,000. (Prepare a single journal entry for this even Accounts Date: Debit Credit f. Allocated overhead to jobs Date f. Accounts Debit Credit a. Houses completed 402 404 Cottage Construction, Inc. is a home builder in Arizona Cottage uses a job order costing system in which each house is a job. Because it constructs ho Date 9. Accounts Debit Credit h. House sold on account: 404 for $270,000 Begin by recording the revenue from the sale on account. Do not record the expense related to the sale in this journal entry. We will do that in the next st Date h. Accounts Now record the cost of goods sold from the sale of house 404. Debit. Credit Now record the cost of goods sold from the sale of house 404 Date: h. Accounts Debit Credit Requirement 3. T-accounts for Work-in-Process Inventory and Finished Goods Inventory have been opened for you. Post the appropriate entries to these accounts, identifying each entry by letter. Determine the ending account balances, assuming that the beginning balances were zero Click to view the journal entries you prepared above Work in Process Inventory Finished Goods Inventory Cottage Construction, Inc. is a home builder in Arizona. Cottage uses a job order costing system in which each house is a job. Because it constructs houses, the comp Requirement 4. Add the costs of the unfinished houses, and show that this total amount equals the ending balance in the Work-in-Process Inventory account Cottage Construction, Inc Reconciliation of Work-in-Process Inventory Subsidiary and Control Accounts Total WIP Balance Unfinished houses Direct Materials Direct Labor Construction Overhead Total cost equals Ending WIP Inventory Requirement 5. Add the costs of the completed house that has not yet been sold, and show that this equals the ending balance in Finished Goods Inventory Cottage Construction, Inc Reconciliation of Finished Goods Inventory Subsidiary Reconciliation of Finished Goods Inventory Subsidiary Completed, unsold house Direct Materials Direct Labor and Control Accounts Construction Overhead Total cost equals Ending Finished Goods Inventory Requirement 6. Compute gross profit on the house that was sold What costs must gross profit cover for Cottage Construction? Cottage Construction, Inc. Gross profit on Homes Sold In August Question 15 of 40 Administration ona Cottage uses a job order costing system i Construction wages Customer service Design Direct labor Direct materials Distribution Income taxes Marketing Research and development istruction?