Problem 11-18B Manufacturing cost for one accounting cycle

The following trial balance was taken from the records of Ansgar Manufacturing Company at the beginning of 2018:

Cash	$ 4,000
Raw materials inventory	200
Work in process inventory	300
Finished goods inventory	200
Property, plant, and equipment	3,500
Accumulated depreciation		$ 1,000
Common stock		4,000
Retained earnings		3,200
Total	$8,200	$8,200

Transactions for the Accounting Period

Ansgar purchased $2,600 of direct raw materials and $300 of indirect raw materials on account. The indirect materials are capitalized in the Production Supplies account. Materials requisitions showed that $2,000 of direct raw materials had been used for production during the period. The use of indirect materials is determined at the end of the period by physically counting the supplies on hand at the end of the year.

By the end of the accounting period, $2,000 of the accounts payable had been paid in cash.

During the year, direct labor amounted to 1,200 hours recorded in the Wages Payable account at $3 per hour.

By the end of the accounting period, $3,250 of the Wages Payable account had been paid in cash.

At the beginning of the accounting period, the company expected overhead cost for the period to be $2,750 and 1,250 direct labor hours to be worked. Overhead is applied based on direct labor hours, which, as indicated in Event 3, amounted to 1,200 for the year.

Administrative and sales expenses for the period amounted to $700 paid in cash.

Utilities and rent for production facilities amounted to $1,500 paid in cash.

Depreciation on the plant and equipment used in production amounted to $1,000.

Assume that $7,500 of goods were completed during the period.

Assume that $5,000 of finished goods inventory was sold for $7,000 cash.

A count of the production supplies revealed a balance of $125 on hand at the end of the accounting period.

Any over- or underapplied overhead is considered to be insignificant.

Required

Open T-accounts with the beginning balances shown in the preceding list and record all transactions for the period including closing entries in the T-accounts. (Note: Open new T-accounts as needed.)

Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.