P L E A SE URGENT

a.

Purchased materials on account, $480,000.

b.

Incurred total manufacturing wages of $113,000, which included both direct labour and indirect labour. Used direct labour in manufacturing as follows:

	Direct Labour
Chalet 13	$14,900
Chalet 14	29,100
Chalet 15	19,500
Chalet 16	21,900

c.

Requisitioned direct materials in manufacturing as follows:

	Direct Materials
Chalet 13	$41,100
Chalet 14	57,000
Chalet 15	62,600
Chalet 16	66,500

d.

Depreciation of manufacturing equipment used on different chalets, $24,000.

e.

Other overhead costs incurred on Chalets

13dash16:

Equipment rentals paid in cash . . . . .	$10,900
Prepaid plant insurance expired . . . . .	6,000

f.

Allocated overhead to jobs at the predetermined rate of 60% of direct labour cost.

g.

Chalets completed: 13, 15, and 16.

h.

Chalets sold on account: #13 for $102,000; #16 for $144,000.

1.	Record the preceding events in the general journal.
2.	Post the appropriate entries to the T-accounts, identifying each entry by letter. Determine the ending account balances assuming that the beginning balances were zero.
3.	Summarize the job costs of the unfinished chalet and show that this equals the ending balance in the work in process inventory.
4.	Summarize the job cost of the completed chalet that has not yet been sold and show that this equals the ending balance in finished goods inventory.
5.	Compute gross profit on each chalet that was sold. What costs must gross profit cover for Steinborn Homes?

Start with the entry from event (a). Purchased materials on account, $480,000.

Journal Entry
Date		Accounts	Debit	Credit
	a.

(b) Incurred total manufacturing wages of $113,000,

which included both direct labour and indirect labour.

Journal Entry
Date		Accounts	Debit	Credit
	b.

(c) Requisitioned direct materials in manufacturing.

Journal Entry
Date		Accounts	Debit	Credit
	c.

(d) Depreciation of manufacturing equipment used on different chalets, $24,000.

Journal Entry
Date		Accounts	Debit	Credit
	d.

(e) Other overhead costs incurred on Chalets 13dash16.

Journal Entry
Date		Accounts	Debit	Credit
	e.

(f) Allocated overhead to jobs at the predetermine rate of 60% of direct labour cost.

Journal Entry
Date		Accounts	Debit	Credit
	f.

(g) Chalets completed: 13, 15, and 16.

Journal Entry
Date		Accounts	Debit	Credit
	g.

(h) Chalets sold on account: 13 for $102,000; 16 for $144,000.

First, record the sale of the chalets. We will record cost of goods sold in the next step.

Journal Entry
Date		Accounts	Debit	Credit
	h.

Next, record the cost of goods sold.

Journal Entry
Date		Accounts	Debit	Credit
	h.

Requirement 2. Post the appropriate entries to the T-accounts, identifying each entry by letter. Determine the ending account balances assuming that the beginning balances were zero. (Leave any unused cells blank.)

Work in Process Inventory

Finished Goods Inventory

Bal.

Bal.

Requirement 3. Summarize the job costs of the unfinished chalet and show that this equals the ending balance in the work in process inventory.

Steinborn Homes
Reconciliation of Work in Process Inventory Subsidiary
and Control Accounts
Unfinished chalet:
	Direct materials
	Direct labour
	Manufacturing overhead (60% of labour)
	Total cost equals Work in Process balance

Requirement 4. Summarize the job cost of the completed chalet that has not yet been sold and show that this equals the ending balance in finished goods inventory.

Steinborn Homes
Reconciliation of Finished Goods Inventory Subsidiary
and Control Accounts
Completed, unsold chalet:
	Direct materials
	Direct labour
	Manufacturing overhead (60% of labour)
	Total cost equals Finished Goods balance

Requirement 5. Compute the gross profit for each chalet sold. What costs must gross profit cover for Steinborn Homes?

Begin by computing the gross profit for each chalet sold. (Enter chalets in numerical order.)

Steinborn Homes
Gross Profit on Chalets Sold In May
Gross profit

What costs must gross profit cover for Steinborn Homes?

The gross profit must cover these types of costs: