Problem 1

Instructions a) Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. (Hint: Use a single T-account for Work in Process Inventory.) Calculate each of the following, then post each to the T-account:

1) beginning balance,

2) direct materials,

3) direct labor,

4) manufacturing overhead, and

5) completed jobs. b) Prepare the adjusting entry for manufacturing overhead, assuming the balance is allocated entirely to cost of goods sold.

c) Determine the gross profit to be reported for 2018.

For the year ended December 31, 2018, the job cost sheets of Murray Company contained the following data. Job Direct Direct Manufacturing Total Number Explanation Materials Labor Overhead Costs 7650 Balance 1/1 $18,000 $20,000 $25,000 $ 63,000 Current year's costs 32,000 36,000 45,000 113,000 7651 Balance 1/1 12,000 16,000 20,000 48,000 Current year's costs 30,000 40,000 50,000 120,000 7652 Current year's costs 35,000 68,000 85,000 188,000 Other data: 1. Raw materials inventory totalled $20,000 on January 1. During the year, $100,000 of raw materials were purchased on account. 2. Finished goods on January 1 consisted of Job No. 7648 for $93,000 and Job No. 7649 for $62,000. 3. Job No. 7650 and Job No. 7651 were completed during the year. 4. Job Nos. 7648, 7649, and 7650 were sold on account for $490,000 5. Manufacturing overhead incurred on account totalled $135,000. 6. Other manufacturing overhead consisted of indirect materials $12,000, indirect labor $ 16,000, and depreciation on factory machinery $19,500