Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.
Each knitter has a knitting machine that is used about 2/3 of the knitters time, the rest of the knitters time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.
The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.
Credit Debit 20,000 1,000 200 5,000 3,404 12.000 Trial Balance November 30, 20Y8 Account Title Cash Accounts Receivable Supplies Materials Work in Process Bument Accumulated Depreciation Equipment Accounts Payable Common Stock Retained ning Dividends Sie Cost of Goods Seld Pastory Overhead Wages Expo 825 150 10,000 12.000 20,096 307,500 255,040 13.750 330,490 370,490 Predetermined Factory Overhead Rate Since the company is more reliant on laber than machines, Maria decides to use direct labor hours (OH) as the activity date for her predetermined factory overhead rate, rather than machine hours (MH). Estimated Selected Amounts for the Year Estimated depreciation on equipment $1,200 Estimated total Office Manager/knitting Supervisor wages $35,000 Estimated office to $6,000 Estimated factory utilities $4,800 Estimated factory rent $12.000 Activity Base Data Estimated number of DLH for the year 5,000 Estimated number of MM for the year 3.500 Compute the predetermined factory overhead rate for the current year $12.00 per DLHX Date: Dec, 10 Materials Requisition Reg. No. 12255 Job No. 39 Description Qty. Issued Unit Price Amount Materials Requisition Date: Dec. 10 Reg. No. 12255 Job No. 83 Description Qty. Issued Unit Price Amount Yam type B 500 skin 55 $3,000 Total issued 13.000 Time Ticket No. 1255 Name: Susan Blake Work Description: Knitting/placing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 65 515 1975 12/16-12/31 103 1,545 Total Cost $2,520 Time Ticket No. 2274 Name: Josh Porter Work DescriptionKnitting/piecing Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 75 $15 51,125 12/16-12/31 85 35 1,320 Dates Job No. Hours Worked Unit Price Amount 12/01-12/15 62 60 515 5900 12/16-12/31 83 109 15 1.635 Total Cost $2.535 Job Cost Sheets On December 10, POGP Company receives an order for 200 sweater vests and assigns Job 83 to the order. Review the Materials Requisition table to add the materials to the Job Cost Sheet for 1sb 3. On December 15, review the Time Ticket tables to add the appropriate amount of direct inbor and factory overhead costs to the Job Cor Sheet for Job 62 for the period December 1 through December 15. On December 31, the last work day of the year for the knitters, review Time Ticket tables to add the appropriate amount of direct labor and factory overhead costs to the Job Cost Sheet for Job B3 for the period December 16 through December 31 If there is no amount or an amount is zero, enter o". If required, round your answers to the nearest cant. Job 62 100 unit: Sweaters Direct Materials Direct Labor Factory Overhead Total Balance Dec. 1 $5,000 $300 5104 55,404 Dec. 15 3,400 4 1,200 X 4,200 X 5,000 3,300 1,304 X 9,604 0 Total Cost 5 X ht. 06.04 X Job 83 Sweater vests Balance Dec. 1 Dec. 10 200 units: Direct Materials 50 3,500 07 Direct Labor 50 07 Factory Overhead Total Job Cost 30 30 3,500X 1,800 x 6,300 X $1,800 X 9,800 X Dec. 3: 4,500 Total Cost 3,500 x 4,500 Journal On December 10, POCP Company receives an order for 200 sweater vest end astight 306 83 to the order Review the Materiela Requisition table to Journalise the entry to record the addition of the materials to Work In Process. 1 an amount box does not require an entry leave it blank Dec 10 Work in Process 3.000 Materials On December 15, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December through December 15, an amount box does not require an entry leave it blank Dec 15 Work in Process 3.000 On December 15, www the Time Ticket tables to Journaise the entry to record the addition of direct obor to work in process for the period December 3 through December 15. 1 an amount box does not require an entry leave blank Dec. 15 Work in Process Wages Payable 1.000 100 on December 15, review the Time Ticket tables to yournoize the entry to record the addition of factory overhead to Work in process for the period December 1 through December 15. If an amount box does not require an entry, leave it blank Dec 15 Work in Process Factory Overhead On December 21/7ob 6z tu completed, movie the Job Cost Sheets and your journal entries. Journaise the entry to move the associated costs to the finishes poolt account. If an amount box does not require an entry levelt Blank DH. 21 Finished Goods 60 Work in Process WA On December 22, 75 of the 100 meters from 3 62 are sold on account for 6:125er Journalize the following sections a. The entry to record the sale D. The entry to record the transfer of costs froen Finished Goods to Cost of Goods sold On December 22, 75 of the 100 sweaters from Job 62 are sold on account for 5125 each. Journalize the following transactions a. The entry to record the sale b. The entry to record the tranufer of costs from Finished Goods to Cost of Good Soid. If an amount box does not require an entry, lanvet blank. Dec. 22 Accounts Receivable Sales 7.203 X Dec. 22 Cost of Goods Sold Finished Goods 7,203 on December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of direct labor to Work in Process for the period December 16 through December 31, 1f an amount box does not require an entry, leave it blank Det. 31 Work in Process 4,500 Wages Payable v On December 31, the last work day of the year for the knitters, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to Work in Process for the period December 6 through December 31. If an amount box does not require an entry leave it blank On December 31, the last work day of the year for enters, review the Time Ticket tables to journalize the entry to record the addition of factory overhead to work in Process for the period December 16 through December 31. an amount box does not require an entry leave it blank De Factory Overhead X 2.160 Factory Overhead 2160 On December 31, journalise the patiewing transactions. Note that expenses (D). (6), and (d) were paid in cash One month depreciation on woment one month's payroll for all emelves c. one montrent of 53,000 6. One month factory ulities of $1.275 If an amount box does not require an entry leave it blank Dec. 31. Accumulated Depreciation Equipment X Wages Expense Wages Payable Factory Overhead X x x X On December 31, journalize the following transactions. Note that expenses (b), (c) and (d) were paid in cash. One month's depreciation on equipment One month's payrol for all employees c. One month's rent of $1,000 d. One month's factory utilities of S: 275 of an amount box does not require an entry leave blank Dec 31 Accumulated Depreciation Equipment X Wages Expense X Wages Payable Factory Overhead X Factory Overhead X On December 31, prepare the journal entry to dispose of the balance in the factory overhead account. Utan amount box does not require an entry, teave it blank De Factory Overhead X 1,275 X CX 1275 Wages Expense Wages Payable Factory Overhead X Factory Overhead X On December 31, prepare the Journal entry to dispose of the balance in the factory overhead account. If an amount box does not require an entry leave it blank, Dec. 3. Factory Overhead Cashx 1.275 X Final Question What are the balances in the following accounts as of December 33+ an amount is zero, enter to Materials 1,500 X Work in Process 12,560 x Finished Goods 52.861 Factory Overhead 5 740 X Cost of Goods Sold 5263,623 X
