PROBLEM $3-9$

Preparing Journal Entries; T$-$Accounts; Cost Flows $[$LO$4-$ CC$8$; LO$6-$ CC$12$;

LO$7-$ CC$14$; LO$8-$ CC$18]$

CHECK FIGURE

$(3)$ Underapplied by $$43,000$

$(4)$ NI: $$6,000$

Aponi Products, Inc. uses a job$-$order costing system. The company's inventory balances on August $1,$ the start of its fiscal

year, were as follows:

During the year, the following transactions were completed:

a$.$ Raw materials were nurchased on account. $$180\mathrm{.}000.$During the year, the following transactions were completed:

a$.$ Raw materials were purchased on account, $$180,000.$

b$.$ Raw materials were issued from the storeroom for use in production, $$200,000(80\%$ direct

and $20\%$ indirect$).$

c$.$ Employee salaries and wages were accrued as follows: direct labour, $$200,000$; indirect labour,

$$85,000$; selling and administrative salaries, $$130,000.$

d$.$ Utility costs were incurred in the factory, $$80,000.$

e$.$ Advertising costs were incurred, $$75,000.$

f$.$ Prepaid insurance expired during the year, $$24,000(75\%$ related to factory operations, and

$25\%$ related to selling and administrative activities$).$

g$.$ Depreciation was recorded, $$150,000(80\%$ related to factory assets, and $20\%$ related to

selling and administrative assets$).$

h$.$ Manufacturing overhead was applied to jobs at the rate of $150\%$ of direct labour cost.

i$.$ Goods that cost $$700,000$ to manufacture according to their job cost sheets were transferred to

the finished goods warehouse.

j$.$ Sales for the year totalled $$1,000,000$ and were all on account. The total cost to manufacture

these goods according to their job cost sheets was $$710,000.$Required:

Prepare journal entries to record the transactions for the year.

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. $($Do not forget to enter the beginning

balances in the inventory accounts.$)$

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

manufactured; all of the information needed for the income statement is available in the

journal entries and T$-$accounts you have prepared.$)$

PROBLEM $3-10$

Computing Costs and Overhead $[$LO$2-$ CC$4$; LO$3-$ CC$5$; LO$5-$ CC$10$; LO$7-$

CC$14]$

CHECK FIGURE

$(2)$ Finishind denartment nverhead annlied $$31850$