Problem 3-15 (Algo) Journal Entries; T-Accounts; Financial Statements [LO3-1, LO3-2, LO3-3, LO3-4] Froya Fabrikker A/S of Bergen, Norway, is a small company that manufactures specialty heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor- hours. Its predetermined overhead rate was based on a cost formula that estimated $357,000 of manufacturing overhead for an estimated allocation base of 1,020 direct labor-hours. The following transactions took place during the year: a. Raw materials purchased on account, $260,000. b. Raw materials used in production (all direct materials), $245,000. c. Utility bills incurred on account, $71,000 (80% related to factory operations, and the remainder related to selling and administrative activities) d. Accrued salary and wage costs: Direct labor (1,095 hours) Indirect labor Selling and administrative salaries $ 290,000 $ 102,000 $ 170,000 e. Maintenance costs incurred on account in the factory, $66,000 f. Advertising costs incurred on account, $148,000. g. Depreciation was recorded for the year, $84,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment). h. Rental cost incurred on account, $109,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). i. Manufacturing overhead cost was applied to jobs, $_?. j. Cost of goods manufactured for the year, $890,000. k. Sales for the year (all on account) totaled $1,800,000. These goods cost $920,000 according to their job cost sheets. The balances in the inventory accounts at the beginning of the year were: Raw Materials Work in Process Finished Goods $ 42,000 $ 33,000 $ 72,000 Required: 1. Prepare journal entries to record the preceding transactions. 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured. 4A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4B. Prepare a schedule of cost of goods sold. 5. Prepare an income statement for the year. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req 3 Req 4A Reg 4B Reg 5 Prepare journal entries to record the preceding transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet The raw materials were purchased for use in production, $260,000 on account. Note: Enter debits before credits. Transaction General Journal Debit Credit a Record entry Clear entry View general journal The raw materials used in production (all direct materials), $245,000. Note: Enter debits before credits. General Journal Debit Credit Transaction b. 1 2 2. 3 4 5 6 7 8 12 The utility bills were incurred on account, $71,000 (80% related to factory operations, and the remainder related to selling and administrative activities). Note: Enter debits before credits. General Journal Debit Credit Transaction c. The maintenance costs were incurred on account in the factory, $66,000. Note: Enter debits before credits. Transaction General Journal Debit Credit e. The advertising costs were incurred on account, $148,000. Note: Enter debits before credits. General Journal Debit Credit Transaction f. 1 2 3 4 5 6 7 8 III.. 12 The depreciation was recorded for the year, $84,000 (75% related to factory equipment, and the remainder related to selling and administrative equipment) Note: Enter debits before credits. General Journal Debit Credit Transaction 9. 1 2 3 4 5 6 7 8 12 The entry for rental cost incurred on account on buildings, $109,000 (80% related to factory facilities, and the remainder related to selling and administrative facilities). Note: Enter debits before credits. General Journal Debit Credit Transaction h. The entry for manufacturing overhead cost applied to jobs. Note: Enter debits before credits. General Journal Debit Credit Transaction i. The cost of goods manufactured for the year, $890,000. Note: Enter debits before credits. General Journal Debit Credit Transaction j The sales for the year (all on account) totaled $1,800,000. Note: Enter debits before credits. General Journal Debit Credit Transaction k(1). 1 5 6 7 8 9 10 11 12 The goods cost $920,000 according to their job cost sheets. Note: Enter debits before credits. General Journal Debit Credit Transaction k(2). Accounts Receivable Sales Credit Credit Debit Beginning Balance Debit Beginning Balance Ending Balance Ending Balance Raw Materials Cost of Goods Sold Credit Credit Debit Beginning Balance Debit Beginning Balance Ending Balance Ending Balance Work in Process Credit Manufacturing Overhead Debit Beginning Balance Debit Beginning Balance Credit Ending Balance Ending Balance Finished Goods Advertising Expense Credit Credit Debit Beginning Balance Debit Beginning Balance Ending Balance Ending Balance Utilities Expense Accumulated Depreciation Debit Beginning Balance Credit Credit Debit Beginning Balance Ending Balance Ending Balance Accounts Payable Salaries Expense Credit Credit Debit Beginning Balance Debit Beginning Balance Ending Balance Ending Balance Depreciation Expense Credit Salaries & Wages Payable Debit Beginning Balance Debit Beginning Balance Credit Ending Balance Ending Balance Rent Expense Credit Debit Beginning Balance Ending Balance Froya Fabrikker A/S Schedule of Cost of Goods Manufactured Direct materials: Total raw materials available Direct materials used in production Total manufacturing costs added to production Total manufacturing costs to account for Cost of goods manufactured Record the entry to close any balance in the manufacturing overhead account to cost of goods sold. Note: Enter debits before credits. General Journal Debit Credit Transaction 1 Prepare a schedule of cost of goods sold. Froya Fabrikker A/S Schedule of Cost of Goods Sold Prepare an income statement for the year. Froya Fabrikker A/S Income Statement For the Year Ended Selling and administrative expenses