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Compromisine Review Problem P O 110 Geronimo Tire Manufacturing Company The comprehensive problem that follows covers the entire job order cost accounting cycle, including all journal entries, general ledger accounts, and subsidiary records. Use it as a thorough review of the entire job order cost cycle. The Geronimo Tire Manufacturing Company produces oversized truck tires. Two raw materials go into the finished product-rubber and steel belting. Production occurs in batches of units, so a job order cost accounting system is used. You will use the following general ledger accounts. No account has a previous balance. 108 Raw Materials Inventory 109 Work-in-Process Inventory Finished Goods Inventory 440 Cost of Goods Sold 470 Factory Overhead Control Directions: 1. Open the following subsidiary records. No record has a previous balance. Rubber Materials ledger record Steel Belting Materials ledger record Factory Supplies Materials ledger record Job 1 Individual job sheet for 1,625 TX tires Job 2 Individual job sheet for 1,300 RX tires Job 3 Individual job sheet for 1,000 TX tires TX Tires Finished goods inventory record 2. Record each of the following transactions in a general journal, beginning with page 1. Immediately after journalizing, post to all subsidiary records that you have opened, and post to the five general ledger accounts that you will use. 3. Verify the balance of each set of subsidiary records against the general ledger controlling account. 20X1 Apr. 1 Purchased raw materials on account, $237,000, recorded on receiving report #1. The purchase is broken out as follows: Rubber $130,000 (16,250 pounds) Steel belting 82,000 (8,200 yards) Factory supplies 25,000 (The record for factory supplies is kept in dollar amounts only-not in units or unit costs.) 2 Returned to the supplier for credit $2,600 (325 pounds) of rubber and $500 of factory supplies. (Remember to enter this information in parentheses in the Received column of the materials ledger records.) 4 Issued materials to production, using materials requisition #1, as follows: Job 1: Rubber $39,000 (4,875 pounds) Steel belting 40,625 (4,062.5 yards) Factory supplies 7,000 Job 2: Rubber $31,200 (3,900 pounds) Steel belting 32,500 (3,250 yards) Factory supplies 5,000 1169 6 Not needed were $2,880 (360 pounds) of the rubber issued to Job 1 and $1,640 (164 yards) of the steel belting issued to Job 2, so they were returned to the raw materials storeroom. (Use parentheses in the Issued column of the materials ledger records and in the Direct Materials column of the job sheets. 15 Recorded the semimonthly payroll of $80,000 gross, with deductions of 6,2% for FICA_OASDI, 1.45% for FICA-HI, and 18% for federal income tax. 15 Distributed the semimonthly payroll costs as follows: Job 1 $27,000 Job 2 23,000 Indirect labor 12,000 Sales salaries 10,000 Office salaries 8,000 18 Purchased raw materials on account, recorded on receiving report #2, $146,000. The purchase consisted of $65,000 (8,125 pounds) of rubber, $49,200 (4,920 yards) of steel belting, and the balance in factory supplies. 19 Issued raw materials to production on materials requisition #2 as follows: Job 1 Rubber $26,000 (3,250 pounds) Steel belting 8,200 (820 yards) Factory supplies 9,000 Job 2: Steel belting $16,400 (1,640 yards) Factory supplies 6,000 Job 3: Rubber $31,200 (3,900 pounds) Steel belting 17,220 (1,722 yards) Factory supplies 8,000 30 Recorded the semimonthly payroll in the same amounts as on April 15. 30 Distributed the semimonthly payroll costs as follows: Job 1 Job 2 20,000 Job 3 16,000 Indirect labor 13,000 Sales salaries 7,500 Office salaries 6,500 $17,000 30 Recorded the employer's payroll taxes for April on the factory payroll only at the following rates: FICA-OASDI, 6.2%; FICA-HI, 1.45%; FUTA, 0.8%; SUTA, 3.4%. 30 Recorded the following factory overhead expenses: Cash expenses $1,300 Depreciation on factory equipment 400 Insurance expired 800 30 Applied factory overhead to production at 75% of direct labor costs. 30 Job 1 was completed. Transferred the cost of the completed job to the finished goods stockroom. 30 Sold on credit 1,600 TX tires at a sale price of $195 each. Shipping order #1 was the source document. 30 Closed the amount of underapplied or overapplied factory overhead. 1170 PART VI | Accounting for Decision Making, and Manufacturing Operations General Ledger Account Raw Materials Inventory Account No. 108 Date Item Credit 20X1 1 Apr. 2 4 Balance P.R. Debit Credit Debit GJ1 23700000 23700000 GJ1 31 00 002339 00 00 GJ1 155 3 2 5 00 785 75 00 GJ1 452 000 83 0 9500 GJ2 | 1460 00 00 229 09500 GJ2 12202000 107017 500 6 18 19 Account Work-in-Process Inventory Account No. 109 Date Item Credit 20X1 Apr. 4 6 15 Balance P.R. Debit Credit Debit GJ1 | 1433 25 00 1433 25 00 GJ1 45 20 00 138 80 500 GJ1 500 00 00 188 805 00 GJ2 990 2000 287 8 25 00 GJ2 530 00 00 340 8 2 500 GJ3 772 50 00 4180 7 5 00 GJ3 1879 4 500 2301 30 00 19 30 30 30 Account Finished Goods Inventory Account No. 110 Date Item P.R. Debit Credit Credit 20X1 Apr. 30 GJ3 187 9 45.00 GJ3 Balance Debit 187 9 4500 28 89,00 30 1850 5600 1080 PART VI | Accounting for Decision Making and Manufacturing Operations Account Cost of Goods Sold Account No. 440 Balance Date Item P.R. Debit Credit Debit Credit 20X1 30 Apr. GJ3 185 0 56 00 GJ3 4 1 800 1850 5600 18547400 30 Account Factory Overhead Control Account No. 470 Date Item P.R . Debit Credit Balance Debit 120100 Credit 20X1 Apr. 4 15 19 GJ1 GJ1 GJ2 GJ2 12 00 12/00000) 23 | 000 1300000 15116 | | 00 125 00 30 24|000000 47|000 6 000 75|1|6|100 77/6||8|00 |4|1|1000 30 30 GJ2 GJ3 GJ3 GJ3 30 77/21 5000) |4|1|8|00 30 Compromisine Review Problem P O 110 Geronimo Tire Manufacturing Company The comprehensive problem that follows covers the entire job order cost accounting cycle, including all journal entries, general ledger accounts, and subsidiary records. Use it as a thorough review of the entire job order cost cycle. The Geronimo Tire Manufacturing Company produces oversized truck tires. Two raw materials go into the finished product-rubber and steel belting. Production occurs in batches of units, so a job order cost accounting system is used. You will use the following general ledger accounts. No account has a previous balance. 108 Raw Materials Inventory 109 Work-in-Process Inventory Finished Goods Inventory 440 Cost of Goods Sold 470 Factory Overhead Control Directions: 1. Open the following subsidiary records. No record has a previous balance. Rubber Materials ledger record Steel Belting Materials ledger record Factory Supplies Materials ledger record Job 1 Individual job sheet for 1,625 TX tires Job 2 Individual job sheet for 1,300 RX tires Job 3 Individual job sheet for 1,000 TX tires TX Tires Finished goods inventory record 2. Record each of the following transactions in a general journal, beginning with page 1. Immediately after journalizing, post to all subsidiary records that you have opened, and post to the five general ledger accounts that you will use. 3. Verify the balance of each set of subsidiary records against the general ledger controlling account. 20X1 Apr. 1 Purchased raw materials on account, $237,000, recorded on receiving report #1. The purchase is broken out as follows: Rubber $130,000 (16,250 pounds) Steel belting 82,000 (8,200 yards) Factory supplies 25,000 (The record for factory supplies is kept in dollar amounts only-not in units or unit costs.) 2 Returned to the supplier for credit $2,600 (325 pounds) of rubber and $500 of factory supplies. (Remember to enter this information in parentheses in the Received column of the materials ledger records.) 4 Issued materials to production, using materials requisition #1, as follows: Job 1: Rubber $39,000 (4,875 pounds) Steel belting 40,625 (4,062.5 yards) Factory supplies 7,000 Job 2: Rubber $31,200 (3,900 pounds) Steel belting 32,500 (3,250 yards) Factory supplies 5,000 1169 6 Not needed were $2,880 (360 pounds) of the rubber issued to Job 1 and $1,640 (164 yards) of the steel belting issued to Job 2, so they were returned to the raw materials storeroom. (Use parentheses in the Issued column of the materials ledger records and in the Direct Materials column of the job sheets. 15 Recorded the semimonthly payroll of $80,000 gross, with deductions of 6,2% for FICA_OASDI, 1.45% for FICA-HI, and 18% for federal income tax. 15 Distributed the semimonthly payroll costs as follows: Job 1 $27,000 Job 2 23,000 Indirect labor 12,000 Sales salaries 10,000 Office salaries 8,000 18 Purchased raw materials on account, recorded on receiving report #2, $146,000. The purchase consisted of $65,000 (8,125 pounds) of rubber, $49,200 (4,920 yards) of steel belting, and the balance in factory supplies. 19 Issued raw materials to production on materials requisition #2 as follows: Job 1 Rubber $26,000 (3,250 pounds) Steel belting 8,200 (820 yards) Factory supplies 9,000 Job 2: Steel belting $16,400 (1,640 yards) Factory supplies 6,000 Job 3: Rubber $31,200 (3,900 pounds) Steel belting 17,220 (1,722 yards) Factory supplies 8,000 30 Recorded the semimonthly payroll in the same amounts as on April 15. 30 Distributed the semimonthly payroll costs as follows: Job 1 Job 2 20,000 Job 3 16,000 Indirect labor 13,000 Sales salaries 7,500 Office salaries 6,500 $17,000 30 Recorded the employer's payroll taxes for April on the factory payroll only at the following rates: FICA-OASDI, 6.2%; FICA-HI, 1.45%; FUTA, 0.8%; SUTA, 3.4%. 30 Recorded the following factory overhead expenses: Cash expenses $1,300 Depreciation on factory equipment 400 Insurance expired 800 30 Applied factory overhead to production at 75% of direct labor costs. 30 Job 1 was completed. Transferred the cost of the completed job to the finished goods stockroom. 30 Sold on credit 1,600 TX tires at a sale price of $195 each. Shipping order #1 was the source document. 30 Closed the amount of underapplied or overapplied factory overhead. 1170 PART VI | Accounting for Decision Making, and Manufacturing Operations General Ledger Account Raw Materials Inventory Account No. 108 Date Item Credit 20X1 1 Apr. 2 4 Balance P.R. Debit Credit Debit GJ1 23700000 23700000 GJ1 31 00 002339 00 00 GJ1 155 3 2 5 00 785 75 00 GJ1 452 000 83 0 9500 GJ2 | 1460 00 00 229 09500 GJ2 12202000 107017 500 6 18 19 Account Work-in-Process Inventory Account No. 109 Date Item Credit 20X1 Apr. 4 6 15 Balance P.R. Debit Credit Debit GJ1 | 1433 25 00 1433 25 00 GJ1 45 20 00 138 80 500 GJ1 500 00 00 188 805 00 GJ2 990 2000 287 8 25 00 GJ2 530 00 00 340 8 2 500 GJ3 772 50 00 4180 7 5 00 GJ3 1879 4 500 2301 30 00 19 30 30 30 Account Finished Goods Inventory Account No. 110 Date Item P.R. Debit Credit Credit 20X1 Apr. 30 GJ3 187 9 45.00 GJ3 Balance Debit 187 9 4500 28 89,00 30 1850 5600 1080 PART VI | Accounting for Decision Making and Manufacturing Operations Account Cost of Goods Sold Account No. 440 Balance Date Item P.R. Debit Credit Debit Credit 20X1 30 Apr. GJ3 185 0 56 00 GJ3 4 1 800 1850 5600 18547400 30 Account Factory Overhead Control Account No. 470 Date Item P.R . Debit Credit Balance Debit 120100 Credit 20X1 Apr. 4 15 19 GJ1 GJ1 GJ2 GJ2 12 00 12/00000) 23 | 000 1300000 15116 | | 00 125 00 30 24|000000 47|000 6 000 75|1|6|100 77/6||8|00 |4|1|1000 30 30 GJ2 GJ3 GJ3 GJ3 30 77/21 5000) |4|1|8|00 30
