Question
Forest Components makes aircraft parts. The following transactions occurred in July. Purchased $16,840 of materials on account. Issued $16,830 in direct materials to the production
Forest Components makes aircraft parts. The following transactions occurred in July.
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Purchased $16,840 of materials on account.
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Issued $16,830 in direct materials to the production department.
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Issued $1,350 of supplies from the materials inventory.
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Paid for the materials purchased in transaction (1) using cash.
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Returned $2,160 of the materials issued to production in (2) to the materials inventory.
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Direct labor employees earned $31,600, which was paid in cash.
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Purchased miscellaneous items for the manufacturing plant for $17,370 on account.
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Recognized depreciation on manufacturing plant of $36,500.
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Applied manufacturing overhead for the month.
Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $435,600. Estimated overhead for the year was $422,532.
The following balances appeared in the inventory accounts of Forest Components for July.
Beginning | Ending | ||||
Materials Inventory | ? | $ | 12,440 | ||
Work-in-Process Inventory | ? | 10,540 | |||
Finished Goods Inventory | $ | 2,690 | 7,030 | ||
Cost of Goods Sold | ? | 75,000 | |||
Required:
a. Prepare journal entries to record these transactions.
b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.
Transaction General Journal Debit Credit No A 1 16,840 Materials inventory Accounts payable 16,840 Work-in-processdirect materials 16,830 Materials inventory 16,830 C 1,350 Manufacturing overhead control Materials inventory 1,350 D 16,840 Accounts payable Cash 16,840 5 Materials inventory 2,160 Work-in-processdirect materials 2,160 31,600 Work-in-processdirect labor Cash 31,600 17,370 Manufacturing overhead control Accounts payable 17,370 H 8 36,500 Manufacturing overhead control Accumulated depreciationplant 36,500 30,865 Work-in-process-overhead Applied manufacturing overhead 30,856 Prepare T-accounts to show the flow of costs during the period from Materials Inventory through cost of Goods Sold. Materials Inventory Work-In-Process Inventory Beg. bal. Beg. bal. Transferred to Finished Goods End. bal. End. bal. Manufacturing Overhead Control Applied Manufacturing Overhead Beg. bal. Beg. bal. End. bal. End. bal. Accounts Payable Cash Beg. bal. Beg. bal. End. bal. 0 End. bal. 0 Finished Goods Inventory Accumulated Depreciation Property, Plant, and Equipment Beg. bal. Beg. bal. Goods completed Transfer to Cost of Goods Sold End. bal. End. bal. Cost of Goods Sold Beg. bal. Goods completed End. balStep by Step Solution
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