Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Problem 3A-4 (Algo) Transaction Analysis [LO3-5] Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1

Problem 3A-4 (Algo) Transaction Analysis [LO3-5]

Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows:

Morrison Company
Balance Sheet
January 1
Assets
Cash $ 46,200
Raw materials $ 15,300
Work in process 7,550
Finished goods 25,800 48,650
Prepaid expenses 2,225
Property, plant, and equipment (net) 126,000
Total assets $ 223,075
Liabilities and Stockholders Equity
Accounts payable $ 13,800
Retained earnings 209,275
Total liabilities and stockholders equity $ 223,075

During January the company completed the following transactions:

  1. Purchased raw materials on account, $85,600.
  2. Raw materials used in production, $96,800 ($77,000 was direct materials and $19,800 was indirect materials).
  3. Paid $182,350 of salaries and wages in cash ($95,200 was direct labor, $35,250 was indirect labor, and $51,900 was related to employees responsible for selling and administration).
  4. Various manufacturing overhead costs incurred (on account) to support production, $37,650.
  5. Depreciation recorded on property, plant, and equipment, $64,400 (70% related to manufacturing equipment and 30% related to assets that support selling and administration).
  6. Various selling expenses paid in cash, $41,900.
  7. Prepaid insurance expired during the month, $1,350 (80% related to production, and 20% related to selling and administration).
  8. Manufacturing overhead applied to production, $138,600.
  9. Cost of goods manufactured, $302,900.
  10. Cash sales to customers, $415,440.
  11. Cost of goods sold (unadjusted), $299,600.
  12. Cash payments to creditors, $80,200.
  13. Underapplied or overapplied overhead $? .

Required:

1. Calculate the ending balances that would be reported on the company's balance sheet on January 31st. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for its affect on the balance sheet.)

2. What is Morrison Companys net operating income for the month of January?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting For Executives And MBAs

Authors: Paul Simko, James Wallace, Joseph Comprix

5th Edition

1618533665, 9781618533661

More Books

Students also viewed these Accounting questions

Question

Explain in detail the different methods of performance appraisal .

Answered: 1 week ago

Question

Identify some of the global differences when negotiating.

Answered: 1 week ago

Question

Describe the team performance model.

Answered: 1 week ago