MANUAL INSTRUCTIONS

1. Journalize the entries for the month of January in the General Journal. When using the work in process account, be sure to post tothe appropriate Job Cost Record.

2. Post the General Journal entries to the General Ledger Accounts provided (Allowance for Doubtful Accounts, Office Supplies, Factory Overhead, and Salaries Payable.

3 Journalize and post the adjusting entries.

NARRATIVE OF TRANSACTIONS

Note: Certain transactions, such as those dealing with payroll, require detailed computational work before preparing the journal entry. These transactions are explained initially in the narrative as they occur. Please refer to the original transaction when preparing a subsequent similar transaction

18 Received a report from the treasurer that BlueRunner Sports Dealers, one of our customers, has declared bankruptcy. Wrote off the balance owed to Hydro Paddle Boards, Inc. by Blue Runner Sports Dealers.

18 Sold and shipped Job No. 1405 to the appropriate customer. Refer to that jobs CostRecord for the total cost of the job to determine the selling price. The customer is not expected to pay within the discount period.

22 Purchased $23,764.32 of direct materials from K.C. Epoxy Supply Company, credit terms net 30 days.

Jan 22 Accepted a job for the manufacture of 28 units R2 (Racing 2) custom stand-up paddle (SUP) boards for Four Oceanic Designers. The promise date is January 31. The company began the job today, applying $6,930.00 of direct materials to Job No. 1408. (Materials Requisition No. 1686)

Jan. 24 Paid GT Matrix Corporation the amount due today from the January 9 purchase.

25 Applied $3,8000.00 of direct labor to Job No. 1402, which will complete the job. (Time Ticket No. 262)

Applied factory overhead using the appropriate rate.

Transferred the completed job to the finished goods account.

26 Sold and shipped Job No. 1402 to the appropriate customer. Refer to that jobs CostRecord for the total cost of the job to determine the selling price. Record the sale net of the 2% discount.

26 Applied $7,780.00 of direct labor to Job No. 1408, which will completethe job. (Time Ticket No. 264)

Applied factor overhead using the appropriate rate.

Transferred the completed job to the finished goods account.

29 Sold and shipped Job No. 1408 to the appropriate customer. Refer to the Job Cost Record for the total cost of the job for billing purposes. Record the sale net of the 2% discount.

29 Paid D H2O Corp. the amount due in payment of the January 1 balance.

29 Received a check from HP SUP, Inc. for the amount due after the discount period has expired.

29 Paid Post Office $1,725.00 for postage added to postage meter. Expense this amount.

29 Paid Telephone Company $1900.00 for January phone service.

29 Paid Island Signs &Advertising Company $3,170.00 for designing ads for our Internet website.

29 Paid Atlantic Power and Light Company $9,600.00 for heat, power, and light. Allocate 35% of this amount to Electricity Expense and 65% to Factory Overhead.

31 Applied $2,900.00of direct labor to Job No. 1404. (Time Ticket No. 266)

Applied factory overhead using the appropriate rate. This job will not be completed until February.

31 Applied $9,840.00of direct labor to Job No. 1407. (Time Ticket No. 268)

Applied factory overhead using the appropriate rate. This job will not be completed until March.

Jan. 31 Applied $3,520.00 of direct labor to Job No. 1406. (Time Ticket No. 270)

Jan. 31 Paid all employees for wages earned in January

Applied factory overhead using the appropriate rate. This job will not be completed until February.

31 Received the following data on the monthly payroll from the payroll clerk:

Direct labor (already recorded) .. $51,660.00 New payroll data (to be recorded):

Factory:

Indirect.................................... $27,440.00 Superintendents salary........... 7,200.00

Nonfactory:

Sales salaries........................... 26,950.00 Officers salaries..................... 17,280.00 Office salaries......................... 18,620.25

Record the monthly payroll in the general journal. Remember that direct labor payroll already has been recorded as it was incurred in January. Salaries for indirect labor are recorded only at the end of the month. Debit Factory Overhead for indirect labor and superintendents salaries,debit other salary expense accounts for the appropriate amounts, credit FICA Tax Payable for 8% of gross pay, credit Employees Income Tax Payable for 15% of gross pay, and credit Salaries Payable for the net pay.

31 Record the employer payroll taxes for January. All payroll taxes related to factory personnel are debited to Factory Overhead; all payroll taxes related to nonfactory personnel are debited to Payroll Taxes ExpenseGeneral. Use a simplified FICA tax rate of 8% of gross pay, a state unemployment tax rate of 5.4%, and a federal unemployment tax rate of 0.8%. Since this is thefirst month in the current year, no employee has reached the ceilings on the payroll taxes.

31 Purchased $17,850.00 of direct materials on account from Light Hardware, Inc.

Adjusting Entries:

Jan. 31 Insurance expired during January:

Factory (debit Factory Overhead) $3,528.00 Selling ........................................ 712.50 General..............................................1137.60

31 Office supplies inventory as of January 31, $1,775

31 Depreciation forthe month:

Factory equipment (debit

Factory Overhead)................. $1,784.00 Office equipment........................ 999.40

31 Amortization of patents for

January (debit Factory Overhead) $820.00

31 Property tax accrued for the month:

Factory (debit Factory Overhead) $875.00 General....................................... 524.52

31 Close out underapplied /overapplied Factory Overhead to Cost of Goods Sold.

31 Based on past experience, Hydro Paddle Boards, Inc. estimates that $14,170.00 is a reasonable balance for the January 31 balance in the Allowance for Doubtful Accounts.

31 Income tax is based on 40% of income before tax. Accrue income tax owed by debiting Income Tax Expense and crediting Income Tax Payable for $22,050.11.