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Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors
Gold Nest Company of Guandong, China, makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales.
The company uses a joborder costing system that applies overhead to jobs based on direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $ of manufacturing overhead for an estimated activity level of $ direct labor dollars. The beginning inventory balances were as follows:
Raw materials $
Work in process $
Finished goods $
During the year, the following transactions were completed:
Raw materials purchased on account, $
Raw materials used in production, $materials costing $ were charged directly to jobs; the remaining materials were indirect
Employee expenses incurred credit Salaries and wages payable:
Direct labor $
Indirect labor $
Sales commissions $
Administrative salaries $
Rent for the year was $$ related to factory operations, and the remainder related to selling and administrative activities
Utility costs incurred in the factory, $
Advertising costs incurred, $
Depreciation on equipment, $$ related to equipment used in factory operations; the remaining $ related to equipment used in selling and administrative activities
Manufacturing overhead cost applied to jobs, $question mark
Completed goods cost $ to manufacture.
Sales for the year all paid in cash totaled $ The manufacturing cost of these goods was $
Required:
Prepare journal entries to record the transactions for the year.
Prepare Taccounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these Taccounts dont forget to enter the beginning balances in your inventory accounts
A Is Manufacturing Overhead underapplied or overapplied?
B Prepare a journal entry to close Manufacturing Overhead to Cost of Goods Sold.
Prepare an income statement. All of the information needed for the income statement is available in the journal entries and Taccounts you have prepared.
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