Problem 2-25A Journal Entries; T-Accounts; Financial Statements [LO1, LO2, LO3, LO4, LO5, LO6, LO7]

Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $211,400 of manufacturing overhead for an estimated allocation base of $151,000 direct material dollars.

The following transactions took place during the year (all purchases and services were acquired on account):

a.	Raw materials purchased, $150,000.
b.	Raw materials requisitioned for use in production (all direct materials), $145,000.
c.	Utility bills incurred in the factory, $23,000.
d.	Costs for salaries and wages were incurred as follows:

Direct labor	$	216,000
Indirect labor	$	57,800
Selling and administrative salaries	$	144,000

e.	Maintenance costs incurred in the factory, $16,000.
f.	Advertising costs incurred, $129,000.
g.	Depreciation recorded for the year, $46,000 (80% relates to factory assets, and the remainder relates to selling and administrative assets).
h.	Rental cost incurred on buildings, $82,000 (90% of the space is occupied by the factory, and 10% is occupied by sales and administration).
i.	Miscellaneous selling and administrative costs incurred, $11,000.
j.	Manufacturing overhead cost was applied to jobs, $ ?
k.	Cost of goods manufactured for the year, $551,000.
l.	Sales for the year (all on account) totaled $1,400,000. These goods cost $520,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were as follows:

Raw Materials	$	21,000
Work in Process	$	27,000
Finished Goods	$	35,000

Required:

1.	Prepare journal entries to record the above data.

	General Journal	Debit	Credit
a.	(Click to select)Manufacturing overheadSalaries and wages payableWork in processAccounts payableAdvertising expenseMiscellaneous expenseRaw materialsSelling and administrative salaries
	(Click to select)Accounts payableSalaries and wages payableAdvertising expenseSelling and administrative salariesRaw materialsWork in processMiscellaneous expenseManufacturing overhead
b.	(Click to select)Advertising expenseManufacturing overheadAccounts payableSelling and administrative salariesMiscellaneous expenseSalaries and wages payableWork in processRaw materials
	(Click to select)Accounts payableWork in processMiscellaneous expenseAdvertising expenseManufacturing overheadRaw materialsSalaries and wages payableSelling and administrative salaries
c.	(Click to select)Miscellaneous expenseRaw materialsAccounts payableSelling and administrative salariesWork in processSalaries and wages payableAdvertising expenseManufacturing overhead
	(Click to select)Miscellaneous expenseAccounts payableWork in processManufacturing overheadService expensesSalaries and wages payableRaw materialsAdvertising expense
d.	(Click to select)Rent expenseAdvertising expenseSalaries and wages payableSelling and administrative salariesManufacturing overheadWork in processAccounts payableMiscellaneous expense
	(Click to select)Accounts payableManufacturing overheadWork in processSelling and administrative salariesAdvertising expenseSalaries and wages payableMiscellaneous expenseRent expense
	(Click to select)Miscellaneous expenseRent expenseSalaries and wages payableAdvertising expenseWork in processManufacturing overheadSelling and administrative salariesAccounts payable
	(Click to select)Work in processSelling and administrative salariesAccounts payableRent expenseMiscellaneous expenseManufacturing overheadAdvertising expenseSalaries and wages payable
e.	(Click to select)Advertising expenseMiscellaneous expenseDepreciation expenseAccounts payableManufacturing overheadSalaries and wages payableAccumulated depreciationSelling and administrative salaries
	(Click to select)Accumulated depreciationDepreciation expenseAdvertising expenseMiscellaneous expenseSelling and administrative salariesAccounts payableSalaries and wages payableManufacturing overhead
f.	(Click to select)Depreciation expenseAccounts payableAdvertising expenseSelling and administrative salariesAccumulated depreciationSalaries and wages payableManufacturing overheadMiscellaneous expense
	(Click to select)Selling and administrative salariesDepreciation expenseMiscellaneous expenseAccumulated depreciationSalaries and wages payableManufacturing overheadAdvertising expenseAccounts payable
g.	(Click to select)Accumulated depreciationManufacturing overheadMiscellaneous expenseSelling and administrative salariesDepreciation expenseRent expenseAdvertising expenseAccounts payable
	(Click to select)Advertising expenseAccumulated depreciationDepreciation expenseAccounts payableSelling and administrative salariesRent expenseManufacturing overheadMiscellaneous expense
	(Click to select)Selling and administrative salariesAdvertising expenseMiscellaneous expenseManufacturing overheadAccounts payableDepreciation expenseRent expenseAccumulated depreciation
h.	(Click to select)Advertising expenseMiscellaneous expenseAccounts payableAccumulated depreciationManufacturing overheadSelling and administrative salariesRent expenseDepreciation expense
	(Click to select)Rent expenseDepreciation expenseAccumulated depreciationAccounts payableAdvertising expenseSelling and administrative salariesManufacturing overheadMiscellaneous expense
	(Click to select)Manufacturing overheadMiscellaneous expenseAccounts payableAccumulated depreciationAdvertising expenseRent expenseDepreciation expenseSelling and administrative salaries
i.	(Click to select)Miscellaneous expenseSelling and administrative salariesAccounts payableRent expenseAdvertising expenseManufacturing overheadWork in processSalaries and wages payable
	(Click to select)Miscellaneous expenseManufacturing overheadSalaries and wages payableRent expenseWork in processAccounts payableSelling and administrative salariesAdvertising expense
j.	(Click to select)Finished goodsRent expenseWork in processManufacturing overheadMiscellaneous expenseSelling and administrative salariesAdvertising expenseSalaries and wages payable
	(Click to select)Manufacturing overheadWork in processAdvertising expenseSelling and administrative salariesRent expenseAccounts payableMiscellaneous expenseSalaries and wages payable
k.	(Click to select)Raw materialsSalesCost of goods soldFinished goodsAccounts payableAccounts receivableWork in processSelling and administrative salaries
	(Click to select)Accounts receivableRaw materialsCost of goods soldWork in processFinished goodsAccounts payableSalesSelling and administrative salaries
l	(Click to select)Accounts receivableFinished goodsSelling and administrative salariesAccounts payableSalesSalaries and wages payableRaw materialsWork in process
	(Click to select)Selling and administrative salariesAccounts receivableSalesRaw materialsCost of goods soldAccounts payableSalaries and wages payableWork in process
	(Click to select)Accounts payableFinished goodsSalesSalaries and wages payableRaw materialsMiscellaneous expenseSelling and administrative salariesCost of goods sold
	(Click to select)Accounts payableSelling and administrative salariesAccounts receivableSalaries and wages payableFinished goodsCost of goods soldMiscellaneous expenseRaw materials

2.	Post your entries to T-accounts. (Dont forget to enter the opening inventory balances above.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account.(Record the transactions in the given order.)

Accounts Receivable

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Raw Materials

Bal.			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Work in Process

Bal.			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Finished Goods

Bal.			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Manufacturing Overhead

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Accounts Payable

			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(j)(i)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			Bal.

Accumulated Depreciation

			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Depreciation Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Salaries & Wages Payable

			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Selling and Administrative Salaries

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Miscellaneous Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Advertising Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Rent Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Cost of Goods Sold

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Sales

			(Click to select)(a)(b)(c)(d)(e)(f)(i)(g)(h)(j)(k)(l)

3.	Prepare a schedule of cost of goods manufactured. (Input all amounts as positive values.)

Southworth Company Schedule of Cost of Goods Manufactured
Direct materials:
(Click to select)Work in process, endingRaw materials inventory, endingFinished goods inventory, beginningRaw materials inventory, beginningWork in process, beginning	$
(Click to select)DeductAdd: (Click to select)Finished goods inventory, beginningPurchases of raw materialsWork in process, beginningWork in process, endingRaw materials inventory, ending
(Click to select)Materials available for useRaw materials inventory, beginningWork in process, endingWork in process, beginningRaw materials inventory, ending
(Click to select)AddDeduct: (Click to select)Raw materials inventory, beginningWork in process, beginningRaw materials inventory, endingWork in process, endingPurchases of raw materials
Materials used in production		$
(Click to select)Raw materials inventory, beginningDirect laborPurchases of raw materialsWork in process, endingRaw materials inventory, ending
(Click to select)Raw materials inventory, beginningPurchases of raw materialsDirect laborRaw materials inventory, endingManufacturing overhead applied to work in process
Total manufacturing cost
(Click to select)DeductAdd: (Click to select)Raw materials inventory, beginningPurchases of raw materialsWork in process, beginningRaw materials inventory, endingWork in process, ending
(Click to select)AddDeduct: (Click to select)Raw materials inventory, beginningWork in process, beginningRaw materials inventory, endingWork in process, endingPurchases of raw materials
Cost of goods manufactured		$

4.	Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Prepare a schedule of cost of goods sold. (Input all amounts as positive values.)

General Journal	Debit	Credit
(Click to select)Manufacturing overheadAccounts receivableSalaries and wages payableSelling and administrative salariesAccounts payableFinished goodsCost of goods soldWork in process
(Click to select)Finished goodsCost of goods soldAccounts receivableManufacturing overheadAccounts payableSalaries and wages payableWork in processSelling and administrative salaries

Schedule of cost of goods sold:
(Click to select)Goods available for saleFinished goods inventory, endingUnderapplied overheadFinished goods inventory, beginningUnadjusted cost of goods sold	$
(Click to select)AddDeduct: (Click to select)Unadjusted cost of goods soldGoods available for saleOverapplied overheadCost of goods manufacturedUnderapplied overhead
(Click to select)Finished goods inventory, beginningCost of goods manufacturedCost of goods available for saleFinished goods inventory, endingUnadjusted cost of goods sold
(Click to select)DeductAdd: (Click to select)Unadjusted cost of goods soldFinished goods inventory, endingOverapplied overheadUnderapplied overheadGoods available for sale
(Click to select)Finished goods inventory, beginningUnderapplied overheadUnadjusted cost of goods soldCost of goods manufacturedFinished goods inventory, ending
(Click to select)AddDeduct: (Click to select)Unadjusted cost of goods soldGoods available for saleFinished goods inventory, endingOverapplied overheadUnderapplied overhead
Adjusted cost of goods sold	$

5.	Prepare an income statement for the year. (Input all amounts as positive values.)

Southworth Company Income Statement
(Click to select)Selling and administrative salariesCost of goods soldSalesMiscellaneous expenseDepreciation expenseRent expenseAdvertising expense		$
(Click to select)Cost of goods soldDepreciation expenseAdvertising expenseSalesRent expenseSelling and administrative salariesMiscellaneous expense
(Click to select)Gross lossGross margin
Selling and administrative expenses:
(Click to select)Selling and administrative salariesMiscellaneous expenseDepreciation expenseUtilities expenseAdvertising expenseRent expenseInsurance expense	$
(Click to select)Depreciation expenseSelling and administrative salariesUtilities expenseMiscellaneous expenseAdvertising expenseInsurance expenseRent expense
(Click to select)Miscellaneous expenseRent expenseSelling and administrative salariesInsurance expenseUtilities expenseDepreciation expenseAdvertising expense
(Click to select)Insurance expenseRent expenseDepreciation expenseSelling and administrative salariesMiscellaneous expenseAdvertising expenseUtilities expense
(Click to select)Selling and administrative salariesRent expenseDepreciation expenseUtilities expenseInsurance expenseMiscellaneous expenseAdvertising expense
(Click to select)Net operating incomeNet operating loss		$

6.

Job 218 was one of the many jobs started and completed during the year. The job required $3,700 in direct materials and 400 hours of direct labor time at a rate of $10 per hour. If the job contained 590 units and the company billed at 80% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer? (Round your answer to 2 decimal places.)

Price charged for Job 218

$

per unit