Manufacturing statement, income statement and T-accounts

PARTI - COST CLASSIFICATIONS & REPORTING (chapters 18 - 20 review) You recently began an internship in the accounting department of Front Range Furniture. As your first assignment you were asked to perform a cost analysis and reporting for the year ended December 31, 2019. The following calendar year-end information is taken from the December 31, 2019, adjusted trial balance and the records of Front Range Furniture. $ 22,250 10,440 12,125 37,400 123,400 8,060 Direct Labor Income taxes expense Indirect labor Misc. Production costs Office salaries expense Raw materials purchased $ 564,500 138,700 61,000 10,440 72,875 896,375 Advertising Expense Depreciation expense - Office Equip. Depreciation expense - Selling Equip. Depreciation expense - Factory Equip. Factory supervision Factory supplies used (indirect materials) Factory utilities Inventories: Raw Materials, Dec 31, 2018 Raw Materials, Dec 31, 2019 Goods-in-Process, Dec 31, 2018 Goods-in-Process, Dec 31, 2019 Finished Goods, Dec 31, 2018 Finished Goods, Dec 31, 2019 39,500 Rent expense - office space Rent expense selling space 42,375 Rent expense - factory building 72,430 Maintenance expense - factory 14,500 Sales 16,100 Sales Discounts 179,200 Sales salaries expense 143,750 25,625 29,000 95,500 32,375 5,002,000 59,375 297,300 5. Prepare the following journal entries from the information in the table above. You may complete the journal entries first, then go back and finish filling in the T-accounts in requirement #4 if this helps you work through this problem. Record the following transactions: A. Purchases of raw materials inventory on account for the year. B. Assignment of materials costs to Goods-in-Process Inventory (all materials are considered direct). C. Payment of Factory Payroll in cash. D. Assignment of Factory Payroll to Goods-in-Process Inventory and Factory Overhead. E. Record all other Factory Overhead. Assume everything except Depreciation is paid in cash. F. Assignment of Factory Overhead to Goods-in-Process Inventory, assuming the company uses a POHR of 75% G. Transfer of goods completed to Finished Goods Inventory. H. Recording of Cost of Goods Sold. 1. Make your adjusting entry for any over- or under-applied Factory Overhead. 6. After completing the above requirements, as part of the information your supervisor wants to present to management of Front Range Furniture, you have been asked to complete a cost classification chart. Use the above list from the accounting ledger of accounts commonly found within the manufacturing industry to complete the cost classification chart in your working papers. Classify each as (a) Product vs. Period cost, (b) Direct vs. Indirect cost, and (c) Fixed vs. Variable cost. AI B D 1 2 6 8 FRONT RANGE FURNITURE Manufacturing Statement 3 For the year ended December 31, 2019 4 Direct Materials 5 Raw materials inventory, December 31, 2018 Raw materials purchased 7 Raw materials available for use Less raw materials inventory, December 31, 2019 9 Direct materials used 10 Direct Labor 11 Factory Overhead 12 Depreciation expense - Factory Equipment 13 Factory Supervision 14 Factory Supplies used 15 Factory Utilities 16 Indirect Labor 17 Miscellaneous production costs 18 Rent expense - Factory building 19 Misc. Factory maintenance 20 Total factory overhead costs 21 Total manufacturing costs 22 Goods-in-Process Inventory, December 31, 2018 23 Total cost of goods in process 24 Less Goods-in-Process Inventory, December 31, 2019 25 Cost of Goods Manufactured 26 27 28 *HINT: This first requirement is a chapter 18 review without use of the POHR calculation. 29 Al JX FRON RAN URNITURE B D $ $ $ $ 1 FRONT RANGE FURNITURE 2 Income Statement 3 For the year ended December 31, 2019 4 Sales 5 Less: Sales Discounts 6 Net Sales 7 Cost of Goods Sold: 8 Finished Goods Inventory, December 31, 2018 $ 9 Cost of Goods Manufactured 10 Goods available for sale $ 11 Less: Finished Goods Inventory, December 31, 2019 12 Cost of Goods Sold 13 Gross Profit from Sales 14 Operating Expenses 15 Selling Expenses 16 Advertising expense $ 17 Depreciation expense - selling equipment 18 Rent expense - selling space 19 Sales salaries expense 20 Total Selling Expenses 21 General and Administrative Expenses 22 Depreciation expense - office equipment $ 23 Office salaries expense 24 Rent expense - office space 25 Total General and Administrative Expenses 26 Total Operating Expenses 27 Income before state and federal taxes 28 Income Taxes Expense 29 Net Income 30 31 $ $ $ $ B D E F G . J M N O P Q Use the general journal below to complete your journal entries of the cost flows shown in your T-accounts. INSTRUCTIONS: Complete the T-accounts with the information taken from the Dec 31, 2019, adjusted trial balance from the accounting records of Front Range Furniture. After completing this section proceed to the next tabs in these working papers to complete the other project requirements. HINT: Your numbers may differ from the Manufacturing Statement created in requirement #1 as you will be using a Predetermined Overhead Rate. 1 2 3 RAW MATERIALS GOODS-IN-PROCESS FINISHED GOODS DATE DEBIT CREDIT ACCOUNT NAMES Raw Materials Inventory Accounts Payable DM COGM 4 5 6 7 8 DL FOH B Goods-in-Process Inventory Raw Materials Inventory 9 LO Factory Payroll Cash -1 List actual costs FACTORY OVERHEAD FACTORY PAYROLL COST OF GOODS SOLD D DL IL FOH -2 3 -4 5 -6 -7 .8 Goods-in-Process Inventory Factory Overhead Factory Payroll Indirect Labor Dep. Exp Factory Factory superv. Factory supplies Factory utilities Misc. Prod. Costs Factory Rent Factory Maint. E Factory Overhead Accum. Dep., Factory Cash 9 F Goods-in-Process Inventory Factory Overhead 0 G Finished Goods Inventory Goods-in-Process Inventory . 20 21 22 3 24 25 26 .7 28 29 30 1 2 3 34 35 Cost of Goods Sold Finished Goods Inventory Factory Overhead Cost of Goods Sold