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Dunder Mifflin, Inc. had the following balances as of 1/1/20X2: Raw Materials: $24,000 Work in Process: $47,000 Finished Goods: $20,000 Additional information: a. Raw materials
Dunder Mifflin, Inc. had the following balances as of 1/1/20X2: |
Raw Materials: $24,000 |
Work in Process: $47,000 |
Finished Goods: $20,000 |
Additional information: |
a. Raw materials purchased on account was $70,000. |
b. Raw materials were requisitioned for use in production, $64,000. ($58,000 direct and $6,000 indirect). |
c. Accrual of factory wages $63,000; maintenance workers for the factory $19,000. |
d. The following costs were incurred on the factory; utilities $27,000, |
equipment rental $18,000, and cable, internet, phone for the factory $4,000. |
e. The accrual of property taxes on the factory was made in the amount of $21,000. |
f. The expiration of prepaid medical insurance on factory workers was made in the amount of $12,500. |
g. Depreciation was recorded on the factory equipment in the amount of $18,000. |
h. ABC Company applies overhead costs based on machine hours worked. For 20X1 the company |
estimated that it will work 15,000 machine hours and incur $90,000 in manufacturing overhead costs. |
The journal entry is made to apply Manufacturing Overhead. A total of 15,500 machine hours have occurred. |
i. The accrual of management salaries $21,000 and office staff salaries $11,000 was made. |
j. Depreciation on office equipment was made in the amount of $9,000. |
k. Advertising for the period was accrued in the amount of $29,000. |
l. Cable, internet, and phone expenses for Sales Offices was $27,000 and General & Administrative was $9,000. |
m. $161,000 of goods were completed and transferred to the finished goods department. |
n. Sold $500,000 (sales price) on account. The goods had a cost of $122,500. |
Required: |
1. Prepare journal entries to record the transactions above. (Sheet 1) |
*** Note: Refer to the partial chart of accounts for account names. *** |
2. Post the entries to ledger "T" accounts. (Sheet 2) |
3. Prepare (in good form) a schedule of cost of goods manufactured (Sheet 3) and an income statement (Sheet 4) |
for the year ending December 31, 20X2. The income statement must show detail of cost of goods sold. |
4a. Identify whether Manufacturing Overhead underapplied or overapplied for the year, and the amount. |
4b. Prepare the journal entry to close manufacturing overhead. (Use the write-off approach). |
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