Heavenly Creations, Inc. opened for business on January 1, 201X as planned and Heaven placed an initial deposit of $10,000 of cash into the business. First, Heaven made a purchase to stock her inventory. Heaven purchased $2,279 of direct ingredients and $150 of indirect ingredients on account for the cakes. During the month of January, the business used 200 pounds of flour, 200 pounds of sugar, 67 dozen eggs and had 4 bad eggs to dispose of during the month. 20 baking soda boxes, 200 pounds of butter, 100 pounds of raisins, 50 bottles of rum, and the other ingredients (one box of each for a total of four).

Manufacturing overhead is applied to production at 4 dollars per cake. Heaven paid cash for the purchase of the oven and all the salaries. Her nieces worked 300 hours in total for the month. January was a very good month for the bakery since it baked 200 cakes and sold all for cash. The average selling price was $50 per cake. All manufacturing overhead is closed out at month-end. The supplier was paid in full at month-end. Heavens Raw Material physical periodic inventory count resulted in an Inventory level valued at zero at month-end. Required: Use Table 3 to record and post the Heavenly Creations, Inc. January transactions using the General Journal and the provided T-accounts (round all calculations to 2 decimal places) All other costs such as utilities, must be accounted for in the T-accounts provided (assume such transactions where applicable, are paid in cash).

TABLE 1: COST INFORMATION ltem and Ingredients Conventional oven Cost $6,000 (depreciated over 5 n/a years on a Straight-Line basis No salvage value) Standard per Cake Refrigerator Baking pans, licenses Baking flour S0 (provided by the landlord $0 (paid for by dad) $24 per8p $2 per dozen $15 per 25 pounds b $6 per 14 $6.50 per 4 pounds $8 per 2 pounds n/a 1 pound ds ba Sugar Baking soda Butter Raisins 1 pound ds box 1 pound 2 pound Others (currants, diced date nutmeg, molasses Cash Register $30 for all 4 boxes per month $12 per month (rental for 2 ears $12 per bottle Rum (alcohol Utilities (includes gas, electric $50 per month and water Mobile phone (business) Salary- Heaven Salary nieces Salary-aunt Accountant Rent Estimated MOH quarter of bottle $50 per month $500 per month $8 per hour $100 per month $100 per month $600 per month $4.00 per cake 1 person 1.5 hours per cake Cake Table 3: Heavenly Creations Entries Journal Entries for the Month Heaven invested $10,000 in cash into Heavenly Creations Heaven bought indirect ingredients for the cakes in the amount of $2,279 and indirect ingredients in the amount of $150 on account Heaven signed an agreement for a cell phone on account Heaven signed a rental agreement on account for a cash register Heaven purchased a new oven and paid cash Heaven paid her vendors for the cake ingredients bought on account Heaven started using the direct materials to make cakes Recognized payable for Brianna and Alexis direct wages Recognized payable for Heaven's first month of salary Recognized Aunt Ellen wages for supervising nieces Recognized Professor's fee for accounting work Apply Manufacturing Overhead to Production Paid payables for cash register and phone Recorded completion of cakes that are available for sale Recorded Cash Sale of Cakes Record Payment of Indirect Product Cost - Utilities and Rent Paid Labor for Month Recorded Depreciation of Oven Recorded MOH Allocation Adjustment Recorded Raw Material Inventory Adjustment January 28 28 28 28 28 29 29 29 29 30 31 31 31 Table 4: Chart of Accounts Liabilities Accounts Payable Salaries Payable Assets Cash Raw Material Inventory Work In Process Inventory Finished Goods Inventory Equipment- Oven Accum, Depreciation Equity Capital, Heaven Jones Revenue Sales Cost Manufacturing Overhead Cost of Goods Sold Expense S&A Expenses TABLE 1: COST INFORMATION ltem and Ingredients Conventional oven Cost $6,000 (depreciated over 5 n/a years on a Straight-Line basis No salvage value) Standard per Cake Refrigerator Baking pans, licenses Baking flour S0 (provided by the landlord $0 (paid for by dad) $24 per8p $2 per dozen $15 per 25 pounds b $6 per 14 $6.50 per 4 pounds $8 per 2 pounds n/a 1 pound ds ba Sugar Baking soda Butter Raisins 1 pound ds box 1 pound 2 pound Others (currants, diced date nutmeg, molasses Cash Register $30 for all 4 boxes per month $12 per month (rental for 2 ears $12 per bottle Rum (alcohol Utilities (includes gas, electric $50 per month and water Mobile phone (business) Salary- Heaven Salary nieces Salary-aunt Accountant Rent Estimated MOH quarter of bottle $50 per month $500 per month $8 per hour $100 per month $100 per month $600 per month $4.00 per cake 1 person 1.5 hours per cake Cake Table 3: Heavenly Creations Entries Journal Entries for the Month Heaven invested $10,000 in cash into Heavenly Creations Heaven bought indirect ingredients for the cakes in the amount of $2,279 and indirect ingredients in the amount of $150 on account Heaven signed an agreement for a cell phone on account Heaven signed a rental agreement on account for a cash register Heaven purchased a new oven and paid cash Heaven paid her vendors for the cake ingredients bought on account Heaven started using the direct materials to make cakes Recognized payable for Brianna and Alexis direct wages Recognized payable for Heaven's first month of salary Recognized Aunt Ellen wages for supervising nieces Recognized Professor's fee for accounting work Apply Manufacturing Overhead to Production Paid payables for cash register and phone Recorded completion of cakes that are available for sale Recorded Cash Sale of Cakes Record Payment of Indirect Product Cost - Utilities and Rent Paid Labor for Month Recorded Depreciation of Oven Recorded MOH Allocation Adjustment Recorded Raw Material Inventory Adjustment January 28 28 28 28 28 29 29 29 29 30 31 31 31 Table 4: Chart of Accounts Liabilities Accounts Payable Salaries Payable Assets Cash Raw Material Inventory Work In Process Inventory Finished Goods Inventory Equipment- Oven Accum, Depreciation Equity Capital, Heaven Jones Revenue Sales Cost Manufacturing Overhead Cost of Goods Sold Expense S&A Expenses