FWF Manufactures solid wood furniture for individual customers. Each piece of furniture

has a unique design. FWF uses job order costing to attach manufacturing costs to the units. Due to the extensive

use of machinery FWF uses machine hours to allocate the overhead. For the current year the estimate for

overhead cost and machine time were $360,000 and 18,000 hours* respectively.

*Machine hours were for 10 machines running for one eight hour shift each day for a five day week. Time was

provided for regular maintenance and setups for each machine each week.

During the year the following events took place:

1. Purchased wood for $ 250,000 on account.

2. Wood was requisitioned for production valued at $252,000.

3. Purchased sandpaper for $1,000 and varnish for $7000 and paid immediately. FWF uses

a supplies account for indirect materials. Assume that the sandpaper is a supply and the varnish is a direct

material.

4. Transferred sandpaper with a purchase price of $900 and varnish with a value of $6,250 to the factory floor.

5. Paid an electric utility bill for factory power of $62,000 in cash.

6. Incurred direct-labor costs of $200,000.

7. Recorded depreciation on the plant and the machinery in the plant of $25,000.

8. Recorded insurance of $25,000 for the plant and $10,000 for the salesmens cars. The insurance had been prepaid.

9. Incurred indirect labor costs of $280,000.

10. Made a cash payment of $240,000 on Accounts Payable and $270,000 for wages accrued.

11. Used 17,000 machine hours during the year.

12. Finished jobs G22, 23, 25, 28 30, 40, 42, 44, at a total cost of $675,000.

13. Made sales for the year of $875,000. Half were on account and half were collected in cash. The December

cost of goods sold was $570,000.

14. Closed Relevant account(s) at year end.

Additional Information:

Account Beg Bal.

Raw Material Inventory $22,500

Manufacturing Overhead $0

Work in Process Inventory $5,000

Wages Payable $20,000

Supplies $150

Finished Goods Inventory $40,000

Cost of Goods Sold $0

Accumulated Depreciation $25,000

Plant & Equipment $100,000

Prepaid Insurance $60,000

Cash $300,000

Accounts Payable $155,000

Accounts Receivable $250,000

Common Stock $275,000

Retained Earnings $302,650

The Tax Rate is 22%

Required:

A. Format a Balance Sheet for the beginning of this year.

B. Prepare journal entries for the transactions listed above.

C. Post all transactions to the appropriate T-accounts.

D. Close Manufacturing Overhead using either method and justify the method you choose. Record the

journal entry and post to the T-accounts.

E. Format an Income Statement for the year and then a Balance Sheet for the end of the year.

F. Discuss the utility of the job-order system being used. When is it good enough to meet the needs of

management and stakeholders and when would the information provided be insufficient?

WIP (17000*(360000/18000)) Explanations please. Only need C-F

Assets Current: *Cash A/R 300000 250000 150 22500 5000 40,000 60000 677650 Supplies Raw Mats. WIP Finished Goods Prepaid Insurance Total Current Assets L/T Assets: PP&E Accumulated Dep. Total L/T Assets Total Assets Liabilities & Stockholder Equity Current Liabilities: 100000 -25000 75000 752650 A/P 155000 20000 175000 W/P Total Current Liabilities L/T Liabilities: Common Stock Retained Earnings Total L/T Liabilities Total liabilities & S/E 275000 302650 577650 752650 250000 250000 252000 252000 2 Dr. Cr. 3 Dr. Dr. 1000 7000 Raw Materials A/P WIP Raw Materials Supplies RMI Cash WIP RMI Supplies MOH Cash A/P 8000 4 Dr. 7150 6250 900 5 Dr. 62000 62000 200000 6 Dr. Cr. 7 Dr. W/P 200000 25000 25000 8 Dr. MOH Control A/D Insurance Expense Prepaid Insurance 25000 10000 35000 280000 Cash 280000 240000 270000 A/P W/P Cash WIP MOH 510000 340000 340000