Davey Required information Problem 19-3A (Algo) Computing and recording job costs; preparing income statement and balance sheet LO P1, P2, P3, P4 [The following information applies to the questions displayed below.] Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded. Cashi Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Debit $ 70,000 39,000 24,500 Credit 0 9,000 3,000 Accounts payable $ 10,000 Notes payable 13,000 Common stock 30,000 Retained earnings (prior year) 91,000 Sales 179,500 Cost of goods sold 112,000 Factory overhead 28,000 General and administrative expenses 38,000 Totals $323,500 $323,500 These six documents must be processed to bring the accounting records up to date. Materials requisition 10: Materials requisition 11: Materials requisition 12: Labor time ticket 52:1 Labor time ticket 53: Labor time ticket 54: $ 4,200 direct materials to Job 402 $ 7,300 direct materials to Job 404 $ 1,800 indirect materials $7,000 direct labor to Job 402 $13,000 direct labor to Job 404 $ 5,000 indirect labor Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 100% of direct labor cost. Required information Problem 19-3A (Algo) Computing and recording job costs; preparing income statement and balance sheet LO P1, P2, P3, P4 [The following information applies to the questions displayed below.] Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory. and the accrued factory payroll (Factory Wages Payable) has not been recorded. Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable. Notes payable Common stock Retained earnings (prior year) Sales Cost of goods sold. Factory overhead General and administrative expenses Totals Debit $ 70,000 39,000 Credit 24,500 0 9,000 3,000 $ 10,000 13,000 30,000 91,000. 179,500 112,000 28,000 38,000 $323,500 $323,500 These six documents must be processed to bring the accounting records up to date. Materials requisition 10: Materials requisition 11: Materials requisition 12: Labor time ticket 52:1 Labor time ticket 53: Labor time ticket 54: $ 4,200 direct materials to Job 402 $ 7,300 direct materials to Job 404. $ 1,800 indirect materials $ 7,000 direct labor to Job 402 $13,000 direct labor to Job 404) $ 5,000 indirect labor Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 100% of direct labor cost. Problem 19-3A (Algo) Part 1 a. Direct materials. b. Direct labor. c. Overhead applied. d. Indirect materials. e. Indirect labor. Required: 1. Use the document information above to prepare journal entries for the above costs. Problem 19-3A (Algo) Part 2 2-a. In Factory Overhead T-account, enter amounts from part 1 related to factory overhead. Determine the amount of over-or underapplied overhead. 2-b. Prepare the entry to close any over- or underapplied overhead to Cost of Goods Sold Problem 19-3A (Algo) Part 3 3. Prepare a revised list of account balances as of December 31. Hint Use the prior year's Retained Earnings balance of $91,000 in this list. 4. Prepare an income statement for the year and a balance sheet as of December 31. Hint Retained earnings is $105,700 at the end of the current year. 5. Assume that the $1,800 on materials requisition 12 should have been direct materials charged to Job 404. Does this error result in overstatement or understatement of total assets?