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 $329,000 of manufacturing overhead for an estimated allocation base of 940 direct labor-hours. The following transactions took place during the year. a. Raw materials purchased on account, $205,000 b. Raw materials used in production (all direct materials). $190,000 c. Utility bills incurred on account, $60,000 (90% related to factory operations, and the remainder related to selling and administrative activities). d. Accrued salary and wage costs: Direct labor (1.015 hours) Indirect labor Selling and administrative salaries $ 235,000 $ 91,000 $ 115,000 e Maintenance costs incurred on account in the factory, $55,000 1. Advertising costs incurred on account, $137,000 g. Depreciation was recorded for the year, $85,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment) h Rental cost incurred on account, $110,000 (75% related to factory facilities, and the remainder related to selling and administrative facilities) 1. Manufacturing overhead cost was applied to jobs, $_? j. Cost of goods manufactured for the year $780,000, k. Sales for the year (all on account) totaled $1,250,000. These goods cost $810,000 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 $32,000 $22,000 $61,000 Required: Prepare journal entries to record the preceding transactions 2. Post your entries to T-accounts. (Don't forget to enter the beginning inventory balonces above.) 3. Prepare a schedule of cost of goods manufactured 1A. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold 48. 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 Req3 Req 4A Reg 45 Reg 5 Prepare journal entries to record the preceding transactions. (Ir no entry is required for a transaction/event, select "No journal entry required in the first account field.) Credit Transaction General Journal No Debit 205,000 1 a 205,000 Raw materials Accounts payable 190.000 2 b. 190.000 Work in process Raw materials 54,000 6,000 3 c. Manufacturing overhead Utilities expense Accounts payable 60,000 4 d. Work in process Manufacturing overhead Salaries expense Salaries and wages payable 235,000 91.000 115,000 441.000 55,000 5 e. 55.000 Manufacturing overhead Accounts payable 137,000 7 6 1 Advertising expense Accounts payable 137,000 85.000 59,500 7 9 Manufacturing overhead Depreciation expense Accumulated depreciation 25,500 82,500 27,500 8 h Manufacturing overhead Rent expense Accounts payable 110,000 es 355,250 9 355,250 Work in process Manufacturing overhead 780,000 10 Finished goods Work in process 780,000 1.250.000 11 k(1) Accounts receivable Sales 1,250,000 810,000 12 K(2) Cost of goods sold Finished goods 810,000 1 The raw materials were purchased for use in production, $205,000 on account. 2 The raw materials used in production (all direct materials), $190,000. The utility bills were incurred on account, $60,000 (90% related to factory operations, and the remainder related to selling and administrative activities). 4 The salary and wage costs accrued were $235,000 (Direct labor), $91,000 (Indirect labor), $115,000 (Selling and administrative salaries). 5 The maintenance costs were incurred on account in the factory, $55,000. Note : = journal entry has been entered 6 The advertising costs were incurred on account, $137,000. The depreciation was recorded for the year, $85,000 (70% related to factory equipment, and the remainder related to selling and administrative equipment). 8 The entry for rental cost incurred on account on buildings, $110,000 (75% related to factory facilities, and the remainder related to selling and administrative facilities). 9 The entry for manufacturing overhead cost applied to jobs. Note : journal entry has been entered 10 The cost of goods manufactured for the year, $780,000. 11 The sales for the year (all on account) totaled $1,250,000. 12 The goods cost $810,000 according to their job cost sheets. Note : = journal entry has been entered Accounts Receivable Sales Beg. Bal. k. Beg. Bal. 1.250,000 1.250,000K End. Bal. 1,250,000 End. Bal. 1,250,000 Cost of Goods Sold Beg. Bal. Raw Materials 31,000 190,000 Beg Bal. K a 205,000 b. 810,000 End. Bal 810,000 End, Bal 16,000 Work in Process Beg. Bal b d Manufacturing Overhead 0 55,000 780,000 22.000 190,000 235,000 355,250 Beg Bal. c. d e 9 End. Bal 22.250 th End. Bal 55.000 Finished Goods Advertising Expense Beg Bal. Beg Bal End. Bal End. Bal. Accumulated Depreciation Utilities Expense Beg Bal Beg. Bal End Bal End, Bal Accounts Payable Salaries Expense Bog, Bali Beg Bal End, Bal End. Bal Salaries & Wages Payable Depreciation Expense Beg. Bal Beg. Bal End. Bal End. Bal Rent Expense Beg. Bal End Bal Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 Req3 Req 4A Reg 4B Reg 5 Prepare a schedule of cost of goods manufactured 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 0 Cost of goods manufactured Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required to transaction/event, select "No joumal entry required" in the first account field.) View transaction list Journal entry worksheet