Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor- hours. Its predetermined overhead rate was based on a cost formula that estimated $380,000 of manufacturing overhead for an estimated allocation base of 1,000 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $220,000. b. Raw materials used in production (all direct materials) $205,000 c. Utlity bills incurred on account, $63,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1,075 hours) Indirect labor Selling and administrative salaries $ 250,000 $ 94,000 $ 130,000 e. Maintenance costs incurred on account in the factory, $58,000 1. Advertising costs incurred on account. $140,000 9. Depreciation was recorded for the year. $88,000 (85% related to foctory equipment, and the remainder related to selling and administrative equipment), h Rental cost incurred on account $113,000 (90% related to factory facilities, and the remainder related to selling and administrative facilities) 1. Manufacturing overhead cost was applied to jobs, $2 J. Cost of goods manufactured for the year, $810,000, K. Sales for the year (all on account) totaled $1,400,000. These goods cost $840,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials Work in Process Finished Goode $ 34,000 $ 25,000 $ 64,000 Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods, manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 43. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year. View transaction list Journal entry worksheet The raw materials were purchased for use in production, $220,000 on account. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry Vlew general Journal View transaction list Journal entry worksheet 1 2 3 4 5 6 7 8 12 The raw materials were purchased for use in production, $220,000 on account. Note: Enter debits before credits. Transaction General Journal Debit Credit a No journal entry required Accounts payable Accounts receivable Record er Accumulated depreciation View general Journa Journal entry worksheet ..... The raw materials used in production (all direct materials), $205,000. Note: Enter debits before credits. General Journal Debit Credit Transaction b. Record entry Clear entry Vlow general journal Journal entry worksheet The cost of goods manufactured for the year, $810,000. Note: Enter debits before credits. Transaction General Journal Debit Credit No journal entry required Accounts payable Accounts receivable Accumulated depreciation Record er Vlew general Journal 1 5 6 7 8 9 10 11 12 7 The sales for the year (all on account) totaled $1,400,000. Note: Enter debits before credits. Transaction General Journal Debit Credit k(1). No journal entry required Accounts payable Accounts receivable Record er Accumulated depreciation View general Journal ... 5 6 7 8 9 10 11 12 The goods cost $840,000 according to their job cost sheets. Note: Enter debits before credits. Transaction General Journal Debit Credit k(2). No journal entry required Accounts payable Accounts receivable Record er Accumulated depreciation View general jo
