Problem 1

The Pullman Inc, a segment of Sysco Holdings manufactures chain hoists. The raw materials inventories on hand on October 1 were as follows:

Chain................12,000lb, $24,000

Pulleys.........4,000 sets, $20,000

Bolts and taps.............10,000lb, $5,000

Steel plates...........4,000 units, $2,000

The balances in the ledger accounts on October 1 were as follows:

Cash.....................................................$12,000

Work in process.....................................35,000

Materials.................................................51,000

Prepaid insurance...................................3,000

Machinery...............................................125,000

Accum. Dep.-machinery...........................................10,500

Office Equipment....................................30,000

Accum. Dep.-office equipment..................................4,800

Office furniture.........................................20,000

Accum. Dep.-office furniture......................................2,500

Accounts payable......................................................30,000

Capital stock..............................................................182,200

Retained earnings......................................................46,000

$276,000 $276,000

Transactions during October were as follows:

Payroll recorded during the month: direct labor, $28,000; indirect labor, $3,000.

Factory supplies purchased for cash, $1,000. (Use a separate inventory account, Factory Supplies.)

Materials purchased on account: chain4,000 lb, $8,800; pulleys2,000 sets, $10,200; steel plates5,000 units, $3,000.

Sales on account for the month, $126,375.

Accounts receivable collected, $72,500.

Materials used during October (FIFO costing): chain, 14,000 lb; pulleys, 4,400 sets; bolts and taps, 4,000 lb; steel plates, 3,800 units.

Payroll paid, $31,000.

Factory supplies on hand, October 31, $350.

Factory heat, light, and power costs for October, $3,000 (not yet paid).

Office salaries paid, $6,000.

Advertising paid, $2,000.

Factory superintendence paid, $1,800.

Expired insuranceon office equipment, $100; on factory machinery, $300.

Factory rent paid, $2,000.

Depreciation on office equipment, $400; on office furniture, $180; on machinery, $1,200.

Factory overhead charged to jobs, $11,950.

Work in Process, October 31, $31,000.

Cost of goods sold during the month, $84,250.

Accounts payable paid, $33,750.

Required: Using Microsoft Excel complete the following tasks:

Set up T-accounts and enter the balances as of October 1.

Prepare journal entries to record each of the transactions A-S.

Post the journal entries to the accounts, setting up any new ledger accounts necessary. Only controlling accounts are to be maintained; however, show the calculation for the cost of materials used.

Prepare a statement of cost of goods manufactured for October.