PROBLEM 2-24 Journal Entries;Accounts; Cost Flows 50 (L04, Los, L07, Lon Basin Products uses a job-order cost system. The company's inventory balances on January 1, the start of ts fiscal year, were as follows: e: Work in process Finished goods $333400 During the year, the following transactions were completed: Raw materials were purchased on account, $273,000. a. b. Raw materials were issued from the storeroom for use in production, S320,000 (75% direct and 25% indirect). c. Employee salaries and wages were accrued as follows: direct labor, $370,000; indirect labor, $100,000; and selling and administrative salaries $85,000. d. e. Utility costs were incurred in the factory, $107,000. Advertising costs were incurred, $168,000. Prepaid insurance expired during the year, $43,000 (95% related to factory operations, and 5% related to selling and administrative activities). g. Depreciation was recorded, $280,000 (80% related to factory assets, and 20% related to selling and administrative assets). Manufacturing overhead was applied to jobs at the rate of 150% of direct labor cost i Goods that cost $1,170,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totaled S1,560,000 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $1,190,000. Required: 1. Prepar journal entries to record the transactions for the year 2. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing Overhead, and Cost of Goods Sold. Post the appropriate parts of your journal entries to these T-accounts. Compute the ending balance in each account. (Don't forget to enter the beginning balances in the inventory accounts.) 3. Is Manufacturing Overhead underapplied or'overapplied for the year? Prepare a journal entry to close this balance to Cost of Goods Sold. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufacture all of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.) 4. PROBLEM 2-24 Journal Entries;Accounts; Cost Flows 50 (L04, Los, L07, Lon Basin Products uses a job-order cost system. The company's inventory balances on January 1, the start of ts fiscal year, were as follows: e: Work in process Finished goods $333400 During the year, the following transactions were completed: Raw materials were purchased on account, $273,000. a. b. Raw materials were issued from the storeroom for use in production, S320,000 (75% direct and 25% indirect). c. Employee salaries and wages were accrued as follows: direct labor, $370,000; indirect labor, $100,000; and selling and administrative salaries $85,000. d. e. Utility costs were incurred in the factory, $107,000. Advertising costs were incurred, $168,000. Prepaid insurance expired during the year, $43,000 (95% related to factory operations, and 5% related to selling and administrative activities). g. Depreciation was recorded, $280,000 (80% related to factory assets, and 20% related to selling and administrative assets). Manufacturing overhead was applied to jobs at the rate of 150% of direct labor cost i Goods that cost $1,170,000 to manufacture according to their job cost sheets were transferred to the finished goods warehouse. j. Sales for the year totaled S1,560,000 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $1,190,000. Required: 1. Prepar journal entries to record the transactions for the year 2. Prepare T-accounts for Raw Materials, Work in Process, Finished Goods, Manufacturing Overhead, and Cost of Goods Sold. Post the appropriate parts of your journal entries to these T-accounts. Compute the ending balance in each account. (Don't forget to enter the beginning balances in the inventory accounts.) 3. Is Manufacturing Overhead underapplied or'overapplied for the year? Prepare a journal entry to close this balance to Cost of Goods Sold. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufacture all of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.) 4
