PROBLEM

$3$

$-$

$9$

Preparing Journal Entries; T

$-$

Accounts; Cost Flows

$[$

LO

$4$

$-$

$$CC

$8$

; LO

$6$

$-$

$$CC

$1$

$2$

; LO

$7$

$-$

$$CC

$1$

$4$

;

L

$0$

$8$

$-$

$$CC

$1$

$8$

$]$

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 purchased on account, $

$1$

$8$

$0$

$,$

$0$

$0$

$0$

$.$

b

$.$

$$Raw materials were issued from the storeroom for use in production, $

$2$

$0$

$0$

$,$

$0$

$0$

$0$

$($

$8$

$0$

$\%$

$$direct and

$2$

$0$

$\%$

indirect

$)$

$.$

c

$.$

$$Employee salaries and wages were accrued as follows: direct labour, $

$2$

$0$

$0$

$,$

$0$

$0$

$0$

; indirect labour, $

$8$

$5$

$,$

$0$

$0$

$0$

;

selling and administrative salaries, $

$1$

$3$

$0$

$,$

$0$

$0$

$0$

$.$

d

$.$

$$Utility costs were incurred in the factory, $

$8$

$0$

$,$

$0$

$0$

$0$

$.$

e

$.$

$$Advertising costs were incurred, $

$7$

$5$

$,$

$0$

$0$

$0$

$.$

f

$.$

$$Prepaid insurance expired during the year, $

$2$

$4$

$,$

$0$

$0$

$0$

$($

$7$

$5$

$\%$

$$related to factory operations, and

$2$

$5$

$\%$

$$related

to selling and administrative activities

$)$

$.$

g

$.$

$$Depreciation was recorded, $

$1$

$5$

$0$

$,$

$0$

$0$

$0$

$($

$8$

$0$

$\%$

$$related to factory assets, and

$2$

$0$

$\%$

$$related to selling and

administrative assets

$)$

$.$

h

$.$

$$Manufacturing overhead was applied to jobs at the rate of

$1$

$5$

$0$

$\%$

$$of direct labour cost.

i

$.$

$$Goods that cost $

$7$

$0$

$0$

$,$

$0$

$0$

$0$

$$to manufacture according to their job cost sheets were transferred to the

finished goods warehouse.

j

$.$

$$Sales for the year totalled $

$1$

$,$

$0$

$0$

$0$

$,$

$0$

$0$

$0$

$$and were all on account. The total cost to manufacture these

goods according to their job cost sheets was $

$7$

$1$

$0$

$,$

$0$

$0$

$0$

$.$

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 end

$-$

ing 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.

$)$