Problem 4-32 (Part Level Submission) Sheridan Wings, Inc, manufactures airplanes for use in stunt shows. Sheridan's factory is highly automated, using the latest in robotic technology accumulate product costs. At the end of 2016, Sheridan's accountants developed the following expectations for 2017 based on the marketing department's sales forecast: Budgeted overhead cost Estimated machine hours Estimated direct labor hours Estimated direct materials cost $1,121,000 55,000 11,000 $1,520,000 Sheridan's inventory count, completed on December 31, 2016, revealed the following ending inventory balances: Raw Materials Inventory Work in Process Inventory Finished Goods Inventory $250,000 $627,000 $3,070,000 The company's 2017 payroll data revealed the following actual payroll costs for the year: Job Title President and CEO Vice president and CFO Factory manager Assistant factory manager Machine operator Security guard, factory Forklift operator Corporate secretary Janitor, factory Annual Total Hours Number Wage Rate Salary per Worked per Employed per Hour Employee Employee $223,000 $178,000 $40,900 $32,500 2,250 $20,800 $7.5 2,000 $36,100 2,150 + in NN The following information was taken from Sheridan's Schedule of Plant Assets. All assets are depreciated using the straight-line method. Plant Asset Factory building Administrative office Factory equipment Purchase Price Salvage Value Useful Life $4,000,000 S150,000 20 Years $650,000 S125,000 30 Years $2,000,000 $20,000 12 Years miscellaneous costs for 2017 all paid in cash included: Cost Amount Factory insurance (fully expired) $12,500 Administrative office utilities $5,200 Factory utilities $32,100 Office supplies (fully consumed) $4,700 Additional information about Sheridan's operations in 2017 includes the following: Raw materials purchases for the year amounted to $1,950,000. All materials were purchased on account. The company used $1,860,000 in raw materials during the year. Of that amount, 85% was direct materials and 15% was indirect materials. Sheridan applied overhead to Work in Process Inventory based on direct materials cost. Airplanes costing $3,450,000 to manufacture were completed and transferred out of Work in Process Inventory. . Sheridan uses a markup of 80% to price its airplanes. Sales for the year were $6,570,000. All sales are made on account. (Note: This transaction requires two journal entries.) (6) Your answer is correct. Prepare the journal entries to record Sheridan's costs for 2017. (Use Salaries Payable and Wages Payable accounts for payroll costs.) (Credit account titles 5,275.) No. Account Titles and Explanation Debit Credit 1. Salaries and Wages Expense | Salaries Payable 437100 (To record salaries for president, vice president, and corpoarte secretary) Manufacturing Overhead 2. i 115000 Salaries Payable (To record salaried factory worker costs) Work in Process Inventory 3. 163125 | 1 Manufacturing Overhead T 55800] Wages Payable 218925 (To record hourly factory worker costs) Depreciation Expense 4. 17500 | Accumulated Depreciation (To record depreciation on administrative office equipment) Manufacturing Overhead 5. 357500 | Accumulated Depreciation (To record depreciation on factory building and equipment) 6. Toffice Supplies Office Utilities 5200 | Cash 9900 (To record administrative office utilities and office supplies expense) Manufacturing Overhead 7. 44600 Cash 44600 (To record factory insurance and factory utilities) 8. Raw Materials Inventory Accounts Payable 1950000 (To record raw materials purchases) 9. Work in Process Inventory Manufacturing Overhead 2790001 Raw Materials Inventory L 1860000 (To record direct materials and indirect materials used in production) 10. Work in Process Inventory 1 1165988 | Manufacturing Overhead (To apply overhead to work in process) 11. Finished Goods Inventory 1 3450000 | Work in Process Inventory (To record transfer of completed airplanes) 12. Accounts Receivable de 5570000 Sales Revenue (To record sale of airplanes to customers) 13. Cost of Goods Sold 3650000 T 3650000 Finished Goods Inventory (To record cost of airplanes sold) (c) Prepare the appropriate T-accounts for Raw Materials Inventory, Work-in-Process Inventory, Finished Goods Inventory, Manufac Raw Materials Bal. 250000 (8) 1950000 (9) 1860000 Bal. Work in Process Inventory Bal. (3) () (10) 627000 163125 1581000 1165988 Bal. Finished Goods Inventory 3070000 Bal. (11) 3450000 (13) 3650000 Bal. 3070000 Manufacturing Overhead 115000 (10) 163125 357500 (2) 7 (3) 1165988 44600 279000 Bal. (13) Cost of Goods Sold 3650000 Sales Revenue (12) 6570000 Click if you would like to Show Work for this question: Open Show Work