Howie Stars produces starts for elementary teachers to reward their students. Howie Stars' trial balance on June 1 follows:

HOWIE STARS Trial Balance June 1, 2012

Balance

Account Title

Debit

Credit

Cash

$14,000

Accounts receivable

155,000

Inventories:

Materials

5,700

Work in process

39,400

Finished goods

20,400

Plant assets

200,000

Accumulated depreciation

$72,000

Accounts payable

127,000

Wages payable

1,700

Common stock

142,000

Retained earnings

91,800

Sales revenue

Cost of goods sold

Manufacturing overhead

Marketing and general expenses

Total

$434,500

434,500

June 1 balances in the subsidiary ledgers were as follows:

Materials subledger: Paper, $4,700; indirect materials, $1,000

Work in process subledger: Job 120, $39,400; $0 for Job 121

Finished goods subledger: Large Stars, $9,400; Small Stars, $11,000

June transactions are summarized as follows:

a. Collections on account, $152,000.

b. Marketing and general expenses incurred and paid, $28,000.

c. Payments on account, $36,000.

d. Materials purchases on credit: Paper, $22,900; indirect materials, $3,800.

e. Materials used in production (requisitioned): Job 120: paper , $850 Job 121: paper, $7,650 Indirect materials, $1,000

f. Wages incurred and assigned during June, $35,000. Labor time records for the month: Job 120, $3,500; Job 121, $16,600; indirect labor, $14,900.

g. Wages paid in June include the balance in the Wages payable account at May 31 and $32,200 of wages incurred during June.

h. Depreciation on plant and equipment, $2,600.

i. Manufacturing overhead was allocated at the predetermined rate of 50% of direct labor cost.

j. Jobs completed during the month: Job 120, 300,000 Large Stars at total cost of $45,500.

k. Credit sales on account: all of Job 120 for $111,000.

l. Closed the Manufacturing overhead account to Cost of goods sold.

Requirements:

1. Journalize the transactions for the company. Howie uses a perpetual inventory system.

2. Open T-accounts for the general ledger, the Materials ledger, the Work in process ledger, and the Finished goods ledger. Insert each account balance as given, and use the reference Bal. Post the journal entries to the T-accounts using the transaction letters as a reference.

3. Prepare a trial balance at June 30, 2012.

4. Use the Work in process inventory T-account to prepare a schedule of cost of goods manufactured for the month of June.

5. Prepare an income statement for the month of June.

Requirement 1

Journal Entry

ITEM

ACCOUNTS AND EXPLANATIONS

POST.

DEBIT

CREDIT

REF.

Jun

30

a.

b.

c.

d.

e.

f.

g.

h.

i.

j.

k1.

k2.

l.

Requirement 2

Scroll way down for all accounts

Cash

Accounts receivable

Bal

Bal

Bal

Bal

Materials inventory

Work in process inventory

Bal

Bal

Bal

Bal

Finished goods inventory

Plant assets

Bal

Bal

Bal

Bal

Accumulated depreciation

Accounts payable

Bal

Bal

Bal

Bal

Wages payable

Common stock

Bal

Bal

Bal

Bal

Retained earnings

Sales revenue

Bal

Bal

Bal

Cost of goods sold

Bal

Manufacturing overhead

Marketing and general expenses

Bal

Bal

Materials inventory ledger:

Paper

Indirect materials

Bal

Bal

Bal

Bal

Work in process ledger:

Job 120

Job 121

Bal

Bal

Bal

Bal

Finished goods ledger:

Large stars

Small stars

Bal

Bal

Bal

Bal

Requirement 3
Howie Stars
Trial Balance
30-Jun-10
ACCOUNT	DEBIT	CREDIT
Cash
Accounts receivable
Inventories:
Materials
Work in process
Finished goods
Plant assets
Accumulated depreciation
Accounts payable
Wages payable
Common stock
Retained earnings
Sales revenue
Cost of goods sold
Marketing and general expenses
Total

Requirement 4

Howie Stars

Schedule of Cost of Goods Manufactured

Month Ended June 30, 2010

Beginning work in process inventory

Direct materials used

Direct labor

Manufacturing overhead allocated

Total manufacturing costs incurred

during the month

Total manufacturing costs to account for

Ending work in process inventory

Cost of goods manufactured

	Requirement 5
	Howie Stars
	Income Statement
	Month Ended June 30, 2010
	Sales revenue
	Cost of goods sold:
	Beginning finished goods inventory
	Cost of goods manufactured
	Cost of goods available for sale
	Ending finished goods inventory
	Unadjusted cost of goods sold
	Underallocated manufacturing overhead
	Adjusted cost of goods sold
	Gross profit
	Marketing and general expenses
	Operating income