problem # 5-20

sheets were transferred to h cost sheets were sold Prepaid relates to selling and ad Miscellaneous selling and administri 4. Manufacturing overhead was applied to production. // 10 of direct labour cost Go the SI 00010 manufacture according to their jobce Sheet finished goods warehouse Goods that had cost $120,000 to manufacture according to their job cosi ments to employees for for $300,000s during the yo the year totalled & Collections from customers during the year walled $197.000 Payments to suppliers on account during the year fotalled 100,000 paymen salaries and wages totalled $90,000 enter the opening balances is needed. Key Make an entry in the Required: 1. Prepare a account for each account in the company's trial balance, and enter the shown above 2 Record the transactions above directly into the fact is above directly into the T-accounts. Prepare new T-accounts as nee your entries to the letters (a) through (1) above. Find the ending balance in each account is manufacturing overhead underapplied or overapplied for the year? Make an ento Taccounts to properly dispose of any balance in the Manufacturing Overhead account 4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods mar ured all of the information needed for the income statement is available in the T-account have prepared.) PROBLEM S-20 Cest Flows: T-Accounts; Income Statement 113, LO5, LO7] POB Inc designs and fabricates movie props such as mock-ups of star fighters and cybernetic robots The company's balance sheet as of January 1, the beginning of the current year, appears below. Since cach prop is a unique design and may require anything from a few hours to a month or more to complete. PQB uses a job-order costing system. Overhead in the fabrication shop is charged to props on the basis of direct labour cost. The company estimated that it would incur $80,000 in manufacturing overhead and S100,000 in direct labour cost during the year. The following transactions were recorded during the year Raw materials, such as wood, paints, and metal sheeting, were purchased on account: $80.000 Raw materials were issued to production: $90,000 ($5.000 of this amount was for indirect materials) Payroll costs were incurred and paid: direct labour, $120,000; indirect labour, $30,000, and selling and administrative salaries, S75.000. Fabrication shop utilities costs were incurred: $12,000. Depreciation was recorded for the year: $30,000 (55,000 on selling and administrative ass $25.000 on fabrication shop assets). Prepaid insurance expired: 54,800 (54,000 related to fabrication shop operations, and som to selling and administrative activities). Shipping expenses were incurred: $40,000 Other manufacturing overhead costs were incurred: $17.000 (credit Accounts Payao Manufacturing overhead was applied to production. Overhead is applied on the bour cost. Overhead is applied on the basis of direct le h i shop operations, and $800 related i Movie props that cost $310,000 to produce according to their job. cost sheets were com k Sales for the year totalled $450,000 and were all on account. The total cost to pro props was $300,000 according to their job cost sheets. Collections on account from customers totalled $445,000. m. Payments on account to suppliers totalled $150,000. props was $300,000 alled S450,000 and ice according to their The total cost to produce these movie eels were completed. Chapter 5 Systems Design Job-Order Costing PQB Inc. Balance Sheet January 1 Assets Current assets: $ 15,000 40,000 Accounts receivable.. Inventories Raw materials. Work in process........ Finished goods (props awaiting shipm Prepaid insurance .... Total current assets.. Buildings and equipment. ... Less accumulated depreciation.... Total assets. $ 25,000 30.000 45,000 100,000 5.000 160,000 500,000 210,000 290,000 $450,000 $ 75,000 Liabilities and Shareholders' Equity Accounts payable...... Capital stock........ $250.000 Retained earnings........ 125.000 Total liabilities and shareholders equity.. 375.000 $450,000 Required: 1. Prepare a T-account for each account on the company's balance sheet, and enter the beginning bal ances. 2. Make entries directly into the T-accounts for the transactions given above. Create new T accounts as needed. Determine an ending balance for each T-account. 3. Was manufacturing overhead underapplied or overapplied for the year? Assume that the company allocates any overhead balance among the Work in Process, Finished Goods, and Cost of Goods Sold accounts, using the overall balances in each account. Prepare a journal entry to show the al. location. (Round allocation percentages to one decimal place.) 4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufac- tured; all of the information needed for the income statement is available in the T-accounts.) PROBLEM 5-21 T-Accounts; Overhead Rates: Journal Entries (LO3, L04, LOS, L071 Kenworth Company uses a job-order costing system. Only three jobs Job 105, Job 106, and Job 107 were worked on during November and December. Job 105 was completed on December 10: the other Two jobs were still in production on December 31. the end of the company's operating year. Data from the job cost sheets of the three jobs follow: Job Cost Sheet Job 106 Job 105 Job 107 sheets were transferred to h cost sheets were sold Prepaid relates to selling and ad Miscellaneous selling and administri 4. Manufacturing overhead was applied to production. // 10 of direct labour cost Go the SI 00010 manufacture according to their jobce Sheet finished goods warehouse Goods that had cost $120,000 to manufacture according to their job cosi ments to employees for for $300,000s during the yo the year totalled & Collections from customers during the year walled $197.000 Payments to suppliers on account during the year fotalled 100,000 paymen salaries and wages totalled $90,000 enter the opening balances is needed. Key Make an entry in the Required: 1. Prepare a account for each account in the company's trial balance, and enter the shown above 2 Record the transactions above directly into the fact is above directly into the T-accounts. Prepare new T-accounts as nee your entries to the letters (a) through (1) above. Find the ending balance in each account is manufacturing overhead underapplied or overapplied for the year? Make an ento Taccounts to properly dispose of any balance in the Manufacturing Overhead account 4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods mar ured all of the information needed for the income statement is available in the T-account have prepared.) PROBLEM S-20 Cest Flows: T-Accounts; Income Statement 113, LO5, LO7] POB Inc designs and fabricates movie props such as mock-ups of star fighters and cybernetic robots The company's balance sheet as of January 1, the beginning of the current year, appears below. Since cach prop is a unique design and may require anything from a few hours to a month or more to complete. PQB uses a job-order costing system. Overhead in the fabrication shop is charged to props on the basis of direct labour cost. The company estimated that it would incur $80,000 in manufacturing overhead and S100,000 in direct labour cost during the year. The following transactions were recorded during the year Raw materials, such as wood, paints, and metal sheeting, were purchased on account: $80.000 Raw materials were issued to production: $90,000 ($5.000 of this amount was for indirect materials) Payroll costs were incurred and paid: direct labour, $120,000; indirect labour, $30,000, and selling and administrative salaries, S75.000. Fabrication shop utilities costs were incurred: $12,000. Depreciation was recorded for the year: $30,000 (55,000 on selling and administrative ass $25.000 on fabrication shop assets). Prepaid insurance expired: 54,800 (54,000 related to fabrication shop operations, and som to selling and administrative activities). Shipping expenses were incurred: $40,000 Other manufacturing overhead costs were incurred: $17.000 (credit Accounts Payao Manufacturing overhead was applied to production. Overhead is applied on the bour cost. Overhead is applied on the basis of direct le h i shop operations, and $800 related i Movie props that cost $310,000 to produce according to their job. cost sheets were com k Sales for the year totalled $450,000 and were all on account. The total cost to pro props was $300,000 according to their job cost sheets. Collections on account from customers totalled $445,000. m. Payments on account to suppliers totalled $150,000. props was $300,000 alled S450,000 and ice according to their The total cost to produce these movie eels were completed. Chapter 5 Systems Design Job-Order Costing PQB Inc. Balance Sheet January 1 Assets Current assets: $ 15,000 40,000 Accounts receivable.. Inventories Raw materials. Work in process........ Finished goods (props awaiting shipm Prepaid insurance .... Total current assets.. Buildings and equipment. ... Less accumulated depreciation.... Total assets. $ 25,000 30.000 45,000 100,000 5.000 160,000 500,000 210,000 290,000 $450,000 $ 75,000 Liabilities and Shareholders' Equity Accounts payable...... Capital stock........ $250.000 Retained earnings........ 125.000 Total liabilities and shareholders equity.. 375.000 $450,000 Required: 1. Prepare a T-account for each account on the company's balance sheet, and enter the beginning bal ances. 2. Make entries directly into the T-accounts for the transactions given above. Create new T accounts as needed. Determine an ending balance for each T-account. 3. Was manufacturing overhead underapplied or overapplied for the year? Assume that the company allocates any overhead balance among the Work in Process, Finished Goods, and Cost of Goods Sold accounts, using the overall balances in each account. Prepare a journal entry to show the al. location. (Round allocation percentages to one decimal place.) 4. Prepare an income statement for the year. (Do not prepare a schedule of cost of goods manufac- tured; all of the information needed for the income statement is available in the T-accounts.) PROBLEM 5-21 T-Accounts; Overhead Rates: Journal Entries (LO3, L04, LOS, L071 Kenworth Company uses a job-order costing system. Only three jobs Job 105, Job 106, and Job 107 were worked on during November and December. Job 105 was completed on December 10: the other Two jobs were still in production on December 31. the end of the company's operating year. Data from the job cost sheets of the three jobs follow: Job Cost Sheet Job 106 Job 105 Job 107