do the transactions up to and including January 17. Record the transactions on the journal link
DON'T FORGET TO ALSO POST TO THE FOUR GENERAL LEDGER ACCOUNTS (SUPPLIES - ALLOWANCE FOR DOUBTHFUL ACCOUNTS - FACTORY OVERHEAD- SALARIES PAYABLE) AND THE JOB COST SHEETS.
I find that printing out the narrative makes this project easier to do than going back and forth from the narrative to your general journal.
Hydro Raddle Boands, line INTRODUCTION The transactions in this practice set were completed by Hydro Paddle Boards, Inc. during January, the first month of the company's fiscal year. Hydro Paddle Boards, Inc. is a manufacturing corporation that designs and manufactures a limited variety of custom stand-up paddle (SUP) boards. The SUP boards vary in size and performance, including beginner, intermediate, advanced, competition, and racing boards Hydro Paddle Boards, Inc. maintains a job- order cost system. You have accepted a position with Hydro Paddle Boards, Inc. as assistant controller, and you will begin your duties on January 1 of the current year. In your review of the previous assistant controller's records, you notice some jobs were incomplete as of December 31 of the previous year. These jobs are contained in the Job Cost Records. You plan to complete most of these jobs in January and to accept new jobs from dealers and other builders. You are responsible for the daily accounting operations, preparation of interim financial statements, and end-of-month adjusting and closing entries. Hydro Paddle Boards, Inc. manufactures all products in a single production department. An individual job-order cost shect is maintained for each job. The job-order cost sheet contains accumulated costs for cach job, including actual direct materials, actual direct labor, and applied factory overhead. Gross pay for direct labor is recorded by a debit to Work in Process. Salaries for all other factory personnel are recorded by a debit to Factory Overhead. Salaries of non-factory personnel are recorded at the end of each month by a debit to the appropriate salary expense accounts. Deductions for employees' FICA and federal income taxes are recorded whenever gross pay is recorded, using the simplified rates of 8% (for FICA, including Medicare) and 15% (for federal income tax). All wages are paid on the last day of the month. All employer payroll taxes are recorded at the end of the month. Payroll taxes related to factory personnel are debited to Factory Overhead. Payroll taxes related to all other company personnel are debited to Payroll Taxes Expense-General. Hydro Paddle Boards, Inc. maintains two materials accounts, one for Direct Materials and one for Indirect Materials and Factory Supplies Factory overhead is applied to each job based on 130% of direct labor cost for that job (was 125% in Dec). Hydro Paddle Boards, Inc. maintains only one factory overhead account. Remember that debits to Factory Overhead represent actual overhead and credits to Factory Overhead represent applied overhead. Since the difference between actual factory overhead and applied factory overhead is insignificant, the overapplied or underapplied balance is closed out to Cost of Goods Sold as an adjusting entry at the end of cach month. Hydro Paddle Boards, Inc. marks up all work by 40% of the job cost. Refer to the individual Job Cost Record for the total cost of the job, and multiply the total cost by 140% to determine the selling price for each job. Since Hydro Paddle Boards, Inc. sells to dealers, sales are exempt from state sales tax. All sales are on account and are subject to terms of 2/10, net 30 days, FOB shipping point. Sales to credit customers expected to take the discount are recorded at the discounted amount. Sales to credit customers who do not normally pay within the discount period are recorded at the gross amount. Since Hydro Paddle Boards, Inc. sells by custom order, it does not accept returns of merchandise. Accounts Payable is used solely for the purchase of direct materials and indirect materials and factory supplies. All vendors expect full payment within 30 days. Operating expenses, with the exception of any accrued salaries, payroll taxes, property taxes, and income taxes, are paid when incurred. All cash received is deposited in the bank, and all payments are made by check. When dealing with an accounts receivable or accounts payable item, be sure to record the company name in the General Journal and post to the Accounts Receivable Ledger or Accounts Payable Ledger. It is January 1, and you are ready to assume your new responsibilities. Good luck! Hydino Paddle Boards, Inc MANUAL INSTRUCTIONS 1. Journalize the entries for the month of January in the General Journal. When using the work in process account, be sure to post to the appropriate Job Cost Record 2. Post the General Journal entries to the General Ledger Accounts provided (Allowance for Doubtful Accounts, Office Supplies, Factory Overhead, and Salaries Payable. 3 Journalize and post the adjusting entries. Hydino Paddle Boardine NARRATIVE OF TRANSACTIONS Note: Certain transactions, such those dealing with Applied factory overhead to Job No. 1403 is payroll, require detailed computational work before based upon 130% of direct labor cost (note preparing the journal entry. These transactions are this was 125% last December but company explained initially in the narrative as they occur. Please has a new rate this year y refer to the original transaction when preparing a subsequent similar transaction. Jan. 4 Transferred the completed job to the finished goods account. Jan. 2 Paid Salt Water Mall $9,200.00 for January rent. Of this amount, 35% is for office 5 Sold and shipped Job No. 1403 to Salt Water Hut.com. All sales are on account facilities and 65% is for factory facilities. 2/10, net 30 days, FOB shipping point 2 Paid RWT Advertising Agency $1800.00 for Hydro Paddle Boards, Inc. marks up all work preparing advertisements in local by 40% of the job cost. Refer to the newspapers. individual Job Cost Record for the total cost 3 Paid Hi-Foam Products Company $16,826.24 of the job, and multiply the total cost by 140% to determine the selling price. in payment of the December 31 balance. Salt WaterHut not expected to pay within 3 Received a check from Calm Waters Board the discount period. Corporation for the amount due (check AR Hydro Paddle Boards, Inc. maintains a schedule). perpetual inventory system. Each time a sale 4 Paid Marine National Bank $47,533.48 for is made to a customer, you must debit Cost December payroll taxes payable as follows: of Goods Sold and credit Finished Goods for the cost of the job. Employees' Income Tax Payable, $28,353.78; FICA Tax Payable, $17,928.88; 8 Requisitioned $2,532.54 of indirect materials Federal Unemployment Tax, $438.38; State and factory supplies to be used in the Unemployment Tax, $812.44. manufacture of all jobs currently in process. (Materials Requisition No. 1680) 4 Paid $13,946.72 for Income Tax Payable. 9 Paid Anabella Henriquez, County Tax Collector. $13,342.00 for property taxes 4 Paid Coco PVC Company $21,428.00 in accrued as of December 31. payment of the December 31 balance, 9 Purchased from GT Matrix Corporation 4 Applied $8,248.00 of direct materials (1679) and $18,240.00 of direct labor (Time Ticket $4,982.52 of indirect factory supplies, credit No. 258) to Job No. 1403, which will terms net 15 days. complete the job. Use the simplified rates of 9 Accepted a job for the manufacture of 66 8% of gross pay for employees' FICA tax units B1 (Beginner SUP) Paddle boards for and 15% of gross pay for employees' Rio Watersports. The promise date is federal income tax. When preparing the February 14. The company began the job entry for applying direct labor, debit Work today, applying $11.928.00 of direct in Process for the gross pay, and credit materials to Job No. 1406. (Materials Employees' Income Tax Payable and FICA Requisition No. 1681) Tax Payable for the appropriate amounts 10 Received a check from Tarpon Sports Ltd. and Salaries Payable for net pay. for the amount due. Remember that employees are paid on the 11 Paid Light Hardware, Inc. $18,200.00 in last day of each month. payment of the December 31 balance. Jan. 11 Applied $2,854.28 of direct materials to Job No. 1402. (Materials Requisition No. 1682) 12 Received a check from Go Paddle Sales Company for the amount duc. 15 Applied $5,128.12 of direct materials to Job No. 1404. (Materials Requisition No. 1683) 16 Purchased $1,486.00 of factory supplies from Keys Supplies Inc. and paid cash. 16 Applied $6,834.00 of direct labor to Job No. 1405, which will complete the job. (Time Ticket No. 260) Applied factory overhead using the appropriate rate. Transferred the completed job to the finished goods account 16 Sold one Standard CI (Competition) custom stand-up paddle (SUP) board to a cash customer for $3,200.00. The cost of the goods shipped from finished goods inventory was $2,400.00. 17 Requisitioned $2,535.00 of indirect materials $ and factory supplies to be used in all factory jobs currently in process. (Materials Requisition No. 1684) 17 Signed a contract with Extreme Board Systems for the manufacture of 77 units RI (Racing I) custom stand-up paddle (SUP) boards. The promise date is February 15. The company began the job today, applying $8,840.000 of direct materials to Job No. 1407. (Materials Requisition No. 1685) 17 Paid the sales manager of Hydro Paddle Boards, Inc. $867.24 for customer entertaining Hydino Paddle Boanesine EXHIBITS Hydro Paddle Boards, Inc. Schedule of Accounts Receivable January 1, 20Y8 Name Aqua-Stream Paddle Board Company Blue Runner Sports Dealers Calm Waters Board Corporation. Extreme Board Systems Fiji Stand-Up Paddle Board Co... Go Paddle Sales Company HP SUP, Inc... Tarpon Sports Ltd. Total. Balance $ 6,480.00 4,346.00 16,693.38 26,550.88 39,426.00 14,429.94 45,883.22 21.031.56 $174.840.98 Hydro Paddle Boards, Inc. Schedule of Accounts Payable January 1, 2048 Name Coco PVC Company. DH2O Corp..... Hi-Foam Products Company. Light Hardware, Inc. Total. Balance $21,428.00 37,244.00 16,826.24 18,200.00 $93.698.24 Hydino Paddle Boenesine CHART OF ACCOUNTS General Ledger Assets (110-199) Revenues (410-499) Current Assets 410 Sales 110 Cash 111 Accounts Receivable Expenses (501-599) 112 Allowance for Doubtful Accounts 501 Cost of Goods Sold 121 Direct Materials 511 Factory Overhead 122 Indirect Materials and Factory Supplies 512 Advertising Expense Print 123 Work in Process 513 Advertising Expense --Internet 124 Finished Goods 514 Electricity Expense 131 Prepaid Insurance 515 Insurance Expense-Selling 132 Office Supplies 516 Insurance Expense-General Fixed Assets 517 Sales Salaries Expense 161 Factory Equipment 518 Officers' Salaries Expense 162 Accumulated Depreciation - Factory Equipment 519 Office Salaries Expense 163 Office Equipment 520 Depreciation Expense-Office Equipment 164 Accumulated Depreciation - Office Equipment 521 Office Supplies Expense Intangible Assets 522 Payroll Taxes Expense-General 171 Organization Costs 523 Postage Expense General 172 Patents 524 Property Tax Expense 525 Rent Expense General Liabilities (210-299) 526 Telephone Expense 210 Accounts Payable 527 Travel and Entertainment Expense 211 Salaries Payable 528 Uncollectible Accounts Expense 221 Employees' Income Tax Payable 599 Miscellaneous Expense 222 FICA Tax Payable 223 Federal Unemployment Tax Payable Other Income and Expense (610-699) 224 State Unemployment Tax Payable 610 Interest Income 225 Property Tax Payable 611 Other Income 226 Income Tax Payable 612 Interest Expense 613 Other Expense Stockholders' Equity (310-399) 310 Common Stock (S10 Par) 311 Paid-In Capital in Excess of Par-Common Stock 312 Retained Earnings 313 Income Summary Income Tax Expense 710 Income Tax Expense Hydro Raddle Boands, line INTRODUCTION The transactions in this practice set were completed by Hydro Paddle Boards, Inc. during January, the first month of the company's fiscal year. Hydro Paddle Boards, Inc. is a manufacturing corporation that designs and manufactures a limited variety of custom stand-up paddle (SUP) boards. The SUP boards vary in size and performance, including beginner, intermediate, advanced, competition, and racing boards Hydro Paddle Boards, Inc. maintains a job- order cost system. You have accepted a position with Hydro Paddle Boards, Inc. as assistant controller, and you will begin your duties on January 1 of the current year. In your review of the previous assistant controller's records, you notice some jobs were incomplete as of December 31 of the previous year. These jobs are contained in the Job Cost Records. You plan to complete most of these jobs in January and to accept new jobs from dealers and other builders. You are responsible for the daily accounting operations, preparation of interim financial statements, and end-of-month adjusting and closing entries. Hydro Paddle Boards, Inc. manufactures all products in a single production department. An individual job-order cost shect is maintained for each job. The job-order cost sheet contains accumulated costs for cach job, including actual direct materials, actual direct labor, and applied factory overhead. Gross pay for direct labor is recorded by a debit to Work in Process. Salaries for all other factory personnel are recorded by a debit to Factory Overhead. Salaries of non-factory personnel are recorded at the end of each month by a debit to the appropriate salary expense accounts. Deductions for employees' FICA and federal income taxes are recorded whenever gross pay is recorded, using the simplified rates of 8% (for FICA, including Medicare) and 15% (for federal income tax). All wages are paid on the last day of the month. All employer payroll taxes are recorded at the end of the month. Payroll taxes related to factory personnel are debited to Factory Overhead. Payroll taxes related to all other company personnel are debited to Payroll Taxes Expense-General. Hydro Paddle Boards, Inc. maintains two materials accounts, one for Direct Materials and one for Indirect Materials and Factory Supplies Factory overhead is applied to each job based on 130% of direct labor cost for that job (was 125% in Dec). Hydro Paddle Boards, Inc. maintains only one factory overhead account. Remember that debits to Factory Overhead represent actual overhead and credits to Factory Overhead represent applied overhead. Since the difference between actual factory overhead and applied factory overhead is insignificant, the overapplied or underapplied balance is closed out to Cost of Goods Sold as an adjusting entry at the end of cach month. Hydro Paddle Boards, Inc. marks up all work by 40% of the job cost. Refer to the individual Job Cost Record for the total cost of the job, and multiply the total cost by 140% to determine the selling price for each job. Since Hydro Paddle Boards, Inc. sells to dealers, sales are exempt from state sales tax. All sales are on account and are subject to terms of 2/10, net 30 days, FOB shipping point. Sales to credit customers expected to take the discount are recorded at the discounted amount. Sales to credit customers who do not normally pay within the discount period are recorded at the gross amount. Since Hydro Paddle Boards, Inc. sells by custom order, it does not accept returns of merchandise. Accounts Payable is used solely for the purchase of direct materials and indirect materials and factory supplies. All vendors expect full payment within 30 days. Operating expenses, with the exception of any accrued salaries, payroll taxes, property taxes, and income taxes, are paid when incurred. All cash received is deposited in the bank, and all payments are made by check. When dealing with an accounts receivable or accounts payable item, be sure to record the company name in the General Journal and post to the Accounts Receivable Ledger or Accounts Payable Ledger. It is January 1, and you are ready to assume your new responsibilities. Good luck! Hydino Paddle Boards, Inc MANUAL INSTRUCTIONS 1. Journalize the entries for the month of January in the General Journal. When using the work in process account, be sure to post to the appropriate Job Cost Record 2. Post the General Journal entries to the General Ledger Accounts provided (Allowance for Doubtful Accounts, Office Supplies, Factory Overhead, and Salaries Payable. 3 Journalize and post the adjusting entries. Hydino Paddle Boardine NARRATIVE OF TRANSACTIONS Note: Certain transactions, such those dealing with Applied factory overhead to Job No. 1403 is payroll, require detailed computational work before based upon 130% of direct labor cost (note preparing the journal entry. These transactions are this was 125% last December but company explained initially in the narrative as they occur. Please has a new rate this year y refer to the original transaction when preparing a subsequent similar transaction. Jan. 4 Transferred the completed job to the finished goods account. Jan. 2 Paid Salt Water Mall $9,200.00 for January rent. Of this amount, 35% is for office 5 Sold and shipped Job No. 1403 to Salt Water Hut.com. All sales are on account facilities and 65% is for factory facilities. 2/10, net 30 days, FOB shipping point 2 Paid RWT Advertising Agency $1800.00 for Hydro Paddle Boards, Inc. marks up all work preparing advertisements in local by 40% of the job cost. Refer to the newspapers. individual Job Cost Record for the total cost 3 Paid Hi-Foam Products Company $16,826.24 of the job, and multiply the total cost by 140% to determine the selling price. in payment of the December 31 balance. Salt WaterHut not expected to pay within 3 Received a check from Calm Waters Board the discount period. Corporation for the amount due (check AR Hydro Paddle Boards, Inc. maintains a schedule). perpetual inventory system. Each time a sale 4 Paid Marine National Bank $47,533.48 for is made to a customer, you must debit Cost December payroll taxes payable as follows: of Goods Sold and credit Finished Goods for the cost of the job. Employees' Income Tax Payable, $28,353.78; FICA Tax Payable, $17,928.88; 8 Requisitioned $2,532.54 of indirect materials Federal Unemployment Tax, $438.38; State and factory supplies to be used in the Unemployment Tax, $812.44. manufacture of all jobs currently in process. (Materials Requisition No. 1680) 4 Paid $13,946.72 for Income Tax Payable. 9 Paid Anabella Henriquez, County Tax Collector. $13,342.00 for property taxes 4 Paid Coco PVC Company $21,428.00 in accrued as of December 31. payment of the December 31 balance, 9 Purchased from GT Matrix Corporation 4 Applied $8,248.00 of direct materials (1679) and $18,240.00 of direct labor (Time Ticket $4,982.52 of indirect factory supplies, credit No. 258) to Job No. 1403, which will terms net 15 days. complete the job. Use the simplified rates of 9 Accepted a job for the manufacture of 66 8% of gross pay for employees' FICA tax units B1 (Beginner SUP) Paddle boards for and 15% of gross pay for employees' Rio Watersports. The promise date is federal income tax. When preparing the February 14. The company began the job entry for applying direct labor, debit Work today, applying $11.928.00 of direct in Process for the gross pay, and credit materials to Job No. 1406. (Materials Employees' Income Tax Payable and FICA Requisition No. 1681) Tax Payable for the appropriate amounts 10 Received a check from Tarpon Sports Ltd. and Salaries Payable for net pay. for the amount due. Remember that employees are paid on the 11 Paid Light Hardware, Inc. $18,200.00 in last day of each month. payment of the December 31 balance. Jan. 11 Applied $2,854.28 of direct materials to Job No. 1402. (Materials Requisition No. 1682) 12 Received a check from Go Paddle Sales Company for the amount duc. 15 Applied $5,128.12 of direct materials to Job No. 1404. (Materials Requisition No. 1683) 16 Purchased $1,486.00 of factory supplies from Keys Supplies Inc. and paid cash. 16 Applied $6,834.00 of direct labor to Job No. 1405, which will complete the job. (Time Ticket No. 260) Applied factory overhead using the appropriate rate. Transferred the completed job to the finished goods account 16 Sold one Standard CI (Competition) custom stand-up paddle (SUP) board to a cash customer for $3,200.00. The cost of the goods shipped from finished goods inventory was $2,400.00. 17 Requisitioned $2,535.00 of indirect materials $ and factory supplies to be used in all factory jobs currently in process. (Materials Requisition No. 1684) 17 Signed a contract with Extreme Board Systems for the manufacture of 77 units RI (Racing I) custom stand-up paddle (SUP) boards. The promise date is February 15. The company began the job today, applying $8,840.000 of direct materials to Job No. 1407. (Materials Requisition No. 1685) 17 Paid the sales manager of Hydro Paddle Boards, Inc. $867.24 for customer entertaining Hydino Paddle Boanesine EXHIBITS Hydro Paddle Boards, Inc. Schedule of Accounts Receivable January 1, 20Y8 Name Aqua-Stream Paddle Board Company Blue Runner Sports Dealers Calm Waters Board Corporation. Extreme Board Systems Fiji Stand-Up Paddle Board Co... Go Paddle Sales Company HP SUP, Inc... Tarpon Sports Ltd. Total. Balance $ 6,480.00 4,346.00 16,693.38 26,550.88 39,426.00 14,429.94 45,883.22 21.031.56 $174.840.98 Hydro Paddle Boards, Inc. Schedule of Accounts Payable January 1, 2048 Name Coco PVC Company. DH2O Corp..... Hi-Foam Products Company. Light Hardware, Inc. Total. Balance $21,428.00 37,244.00 16,826.24 18,200.00 $93.698.24 Hydino Paddle Boenesine CHART OF ACCOUNTS General Ledger Assets (110-199) Revenues (410-499) Current Assets 410 Sales 110 Cash 111 Accounts Receivable Expenses (501-599) 112 Allowance for Doubtful Accounts 501 Cost of Goods Sold 121 Direct Materials 511 Factory Overhead 122 Indirect Materials and Factory Supplies 512 Advertising Expense Print 123 Work in Process 513 Advertising Expense --Internet 124 Finished Goods 514 Electricity Expense 131 Prepaid Insurance 515 Insurance Expense-Selling 132 Office Supplies 516 Insurance Expense-General Fixed Assets 517 Sales Salaries Expense 161 Factory Equipment 518 Officers' Salaries Expense 162 Accumulated Depreciation - Factory Equipment 519 Office Salaries Expense 163 Office Equipment 520 Depreciation Expense-Office Equipment 164 Accumulated Depreciation - Office Equipment 521 Office Supplies Expense Intangible Assets 522 Payroll Taxes Expense-General 171 Organization Costs 523 Postage Expense General 172 Patents 524 Property Tax Expense 525 Rent Expense General Liabilities (210-299) 526 Telephone Expense 210 Accounts Payable 527 Travel and Entertainment Expense 211 Salaries Payable 528 Uncollectible Accounts Expense 221 Employees' Income Tax Payable 599 Miscellaneous Expense 222 FICA Tax Payable 223 Federal Unemployment Tax Payable Other Income and Expense (610-699) 224 State Unemployment Tax Payable 610 Interest Income 225 Property Tax Payable 611 Other Income 226 Income Tax Payable 612 Interest Expense 613 Other Expense Stockholders' Equity (310-399) 310 Common Stock (S10 Par) 311 Paid-In Capital in Excess of Par-Common Stock 312 Retained Earnings 313 Income Summary Income Tax Expense 710 Income Tax Expense
