Learning Objectives 2, 3, 4, 5 P17-32A Preparing comprehensive accounting for manufacturing transactions Mighty Stars produces stars for elementary teachers to reward their students. Mighty Stars' trial balance on June 1 follows: 4. COGM $47,430 5. Operating Income $18,950 MIGHTY STARS Trial Balance June 1, 2018 Balance Account Title Debit Credit Cash $ 14,000 Accounts Receivable 160,000 Inventories: Raw Materials 6,000 40,000 20,400 220,000 $ 75,000 Work-in-Process Finished Goods Property, Plant, and Equipment Accumulated Depreciation Accounts Payable Wages Payable Common Stock Retained Earnings Sales Revenue 134,000 2,600 139,000 109,800 0 0 Cost of Goods Sold Manufacturing Overhead Selling and Administrative Expenses Totals 0 $ 460,400 $ 460,400 f. Wages incurred during June, $39,000. Labor time records for the month: Job 120, $3,600; Job 121, $17,000; indirect labor, $18,400. g. Wages paid in June include the balance in Wages Payable at May 31 plus $36,100 of wages incurred during June. h. Depreciation on plant and equipment, $2,500. i. Manufacturing overhead allocated at the predetermined overhead allocation rate of 80% of direct labor costs. j. Jobs completed during the month: Job 120 with 700,000 Large Stars at a total cost of $47,430. k. Sales on account: all of Job 120 for $104,000. 1. Adjusted for overallocated or underallocated manufacturing overhead. Requirements 1. Journalize the transactions for the company. 2. Open T-accounts for the general ledger, the Raw Materials Inventory subsidiary ledger, the Work-in-Process Inventory subsidiary ledger, and the Finished Goods Inventory subsidiary ledger. Insert each account balance as given, and use the ref- erence Bal. Post the journal entries to the T-accounts using the transaction letters as a reference. 3. Prepare a trial balance at June 30, 2018. 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. . . June 1 balances in the subsidiary ledgers were as follows: Raw Materials Inventory subsidiary ledger: Paper, $4,000; indirect materials, $2,000 Work-in-Process Inventory subsidiary ledger: Job 120, $40,000; Job 121, $0 Finished Goods Inventory subsidiary ledger: Large Stars, $9,900; Small Stars, $10,500 June transactions are summarized as follows: a. Collections on account, $145,000. b. Selling and administrative expenses incurred and paid, $32,000. c. Payments on account, $39,000. d. Materials purchases on account: Paper, $24,000; indirect materials, $4,200. e. Materials requisitioned and used in production: Job 120: Paper, $950 Job 121: Paper, $7,900 Indirect materials, $1,200
