Problem 18-1 T Account Analysis with Unknowns

Patriotic Enterprises makes flags. The company's new controller can find only the following partial information for the past two months:

Account/Transaction	May	June
Beginning Materials Inventory	$36,240	e.
Beginning Work in Process Inventory	56,480	f.
Beginning Finished Goods Inventory	44,260	g.
Materials purchased	a.	96,120
Direct materials requested	82,320	h.
Direct labor costs	b.	72,250
Overhead applied	53,200	i.
Cost of units completed	c.	221,400
Cost of Goods Sold	209,050	j.
Ending Materials Inventory	38,910	41,950
Ending Work in Process Inventory	d.	k.
Ending Finished Goods Inventory	47,940	51,180

The current year's predetermined overhead rate is 80 percent of direct labor cost.

Using the data provided and T accounts, compute the unknown values.

May
Materials Inventory
Beg. Bal.		Requests:
a. Purchases
End. Bal.

Work in Process Inventory
Beg. Bal.		c. Completed
Direct Materials
b. Direct Labor
Overhead
d. End. Bal.

Finished Goods Inventory
Beg. Bal.		Cost of Goods Sold
c. Completed
End. Bal.

June
Materials Inventory
e. Beg. Bal.		h. Requests:
Purchases
End. Bal.

Work in Process Inventory
f. Beg. Bal.		Completed
h. Direct Materials
Direct Labor
i. Overhead
k. End. Bal.

Finished Goods Inventory

g. Beg. Bal.

j. Cost of Goods Sold

Completed

End. Bal.

2-

Problem 18-2 Job Order Costing: T Account Analysis

Eagle Carts, Inc., produces special-order golf carts, so Eagle Carts uses a job order costing system. Overhead is applied at the rate of 90 percent of direct labor cost. A list of transactions for January follows:

Jan. 1		Purchased direct materials on account, $215,400.
2		Purchased indirect materials on account, $49,500.
4		Requested direct materials costing $193,200 (all used on Job X) and indirect materials costing $38,100 for production.
10		Paid the following overhead costs: utilities, $4,400; manufacturing rent, $3,800; and maintenance charges, $3,900.
15		Recorded the following gross wages and salaries for employees: direct labor, $120,000 (all for Job X); indirect labor, $60,620.
15		Applied overhead to production.
19		Purchased indirect materials costing $27,550 and direct materials costing $190,450 on account.
21		Requested direct materials costing $214,750 (Job X, $178,170; Job Y, $18,170; and Job Z, $18,410) and indirect materials costing $31,400 for production.
31		Recorded the following gross wages and salaries for employees: direct labor, $132,000 (Job X, $118,500; Job Y, $7,000; Job Z, $6,500); indirect labor, $62,240.
31		Applied overhead to production.
31		Completed and transferred Job X (375 carts) and Job Y (10 carts) to finished goods inventory; total cost was $855,990.
31		Shipped Job X to the customer; total production cost was $824,520 and sales price was $996,800.
31		Recorded these overhead costs (adjusting entries): prepaid insurance expired, $3,700; property taxes (payable at year end), $3,400; and depreciationmachinery, $15,500.

1. Record the entries for all transactions in January using T accounts below. Enter the transactions in chronological order. In case two transactions of the same date should be recorded using the same T account, enter them in the same order they are provided in the list of transactions. Assume no beginning inventory balances. Also assume that when the payroll was recorded, entries were made to the Payroll Payable account.

Materials Inventory
SelectJan. 1Jan. 4Jan. 10Jan. 15Jan. 21Jan. 31Item 1		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 31Item 3
SelectJan. 2Jan. 4Jan. 10Jan. 15Jan. 21Jan. 31Item 5		SelectJan. 1Jan. 2Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 7
SelectJan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 9
End. Bal.

Work in Process Inventory
SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 19Item 12		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 14
SelectJan. 1Jan. 2Jan. 10Jan. 15Jan. 19Item 16
SelectJan. 1Jan. 2Jan. 10Jan. 15Jan. 19Item 18
SelectJan. 1Jan. 2Jan. 10Jan. 19Jan. 21Item 20
SelectJan. 1Jan. 2Jan. 10Jan. 19Jan. 31Item 22
SelectJan. 1Jan. 2Jan. 10Jan. 19Jan. 31Item 24
End. Bal.

Finished Goods Inventory
SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 27		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 29
End. Bal.

Overhead
SelectJan. 1Jan. 2Jan. 4Jan. 19Item 32		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Item 34
SelectJan. 1Jan. 2Jan. 10Jan. 19Item 36		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 19Jan. 21Jan. 31Item 38
SelectJan. 1Jan. 2Jan. 15Jan. 19Item 40
SelectJan. 1Jan. 2Jan. 19Jan. 21Item 42
SelectJan. 1Jan. 2Jan. 19Jan. 31Item 44
SelectJan. 1Jan. 2Jan. 19Jan. 31Item 46
End. Bal.

Cash
		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 49
		End. Bal.

Accounts Receivable
SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 52
End. Bal.

Prepaid Insurance
		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 55
		End. Bal.

Accumulated DepreciationMachinery
		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 58
		End. Bal.

Accounts Payable
		SelectJan. 1Jan. 4Jan. 10Jan. 15Jan. 21Jan. 31Item 61
		SelectJan. 2Jan. 4Jan. 10Jan. 15Jan. 21Jan. 31Item 63
		SelectJan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 65
		End. Bal.

Payroll Payable
		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Item 68
		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 19Jan. 21Jan. 31Item 70
		End. Bal.

Property Taxes Payable
		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 73
		End. Bal.

Sales
		SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 76
		End. Bal.

Cost of Goods Sold
SelectJan. 1Jan. 2Jan. 4Jan. 10Jan. 15Jan. 19Jan. 21Jan. 31Item 79
End. Bal.

Prepare job order cost cards for Job X, Job Y, and Job Z to determine the following costs. When computing the product unit cost for Job X and Job Y, round to two decimal places, if required.

	Job X	Job Y	Job Z
Direct materials	$	$	$
Direct labor	$	$	$
Overhead	$	$	$
Total cost	$	$	$
Product unit cost	$	$

2. Compute the amount of underapplied or overapplied overhead as of January 31 and transfer it to the Cost of Goods Sold account.

SelectUnderapplied overheadOverapplied overheadItem 96

$

-Select-Cost of Goods SoldOverheadFinished Goods InventoryWork in Process InventoryItem 98	$
-Select-Cost of Goods SoldOverheadFinished Goods InventoryWork in Process InventoryItem 100		$

3. Why should the Overhead account's underapplied or overapplied overhead be transferred to the Cost of Goods Sold account?