P2-27 OB 2, 3 4) Comprehensive accounting for manufacturing transactions [90-120 min] Sneeches' Stars produces stars for elementary teachers to reward their students. Sneeches' Stars trial balance on April 1 follows: SNEECHES STARS Trial Balance April 1, 2010 Balance Accoant Title Debit Credit Cash Accounts teceivable s 18,000 170,000 Materials Work in process Finished goods 5,300 41,300 21,300 250,000 Plant assets Accumulated Accounts payable Wages payable Common stock Retained carnings Sales revenue Cost of goods sold Manufacturing wages 129,000 2,800 140,000 166,100 Marketing and general expenscs $505,900505,900 April 1 balances in the subsidiary ledgers were as follows: Materials subledgers Paper, $4,800, indirect materials, $500 . Work in progress subledger Job 120, $41,300 Finished goods subledger: Large Stars, 59,300; Small Stars, $12,000 April transactions are summarized as follows: a. Collections on account, $149,000 h. Marketing and gencral expenses incurred and paid, $25,000 c. Payments on account, $38,000 Materials purchases on credit: Paper, $24,500, indirect matcriali, $4.600 e. Materials used in prodaction (requisitioned) Job 120: paper, $750 Job 121s paper, $7,800 Indirect materials, $2,000 f. Manufacturing wages incurred during April, $38,000, of which $36,000 was paid. Wages payable at March 31 were paid during April, $2,800 g. Labor time records for the month: Job 120, $4,000; Job 121, s18,000, indirect labor, $16,000 h. Depreciation on plant and equipment, $2,400 L Manufacturing overhead was allocated at the predetermined rate of 70% of direct labor cost i. Jobs completed daring the month: Jub 120, 400,000 Large Stars ar total cost of $48,850 k. Credit sales on account: all of Job 120 for $110,000 L Closed the Manufacturing overhead accouns to Cost of goods sold Job Order Costing Requirements 1. Open T-accounts for the general ledger, the Materials ledger, the Work in process ledger, and the Finished goods ledger. Insert each account balance as given, and use the reference Bal. ences. Sneeches uses a perpetual inventory system. 3. Prepare a trial balance at April 30. 4. Use the Work in process T-account to prepare a schedule of cost of goods manu- factured for the month of April. (You may want to review Exhibit 1-10.) 5. Prepare an income statement for the month of April. To calculare cost of goods sold, you may want to review Exhibit 1-7. (Hint: In transaction I you closed any under/overallocated manufacturing overhead to Cost of goods sold. In the income statement, show this correction as an adjustment to Cost of goods sold. If manufacturing overhead is underallocated, the adjustment will increas of goods sold. If overhead is overallocated, the adjustment will decrease Cost of goods sold.) e Cost
