QUESTION: PREPARE STATEMENT OF RETAINED EARNINGS

1. ISSUED COMMON STOCK WORTH $ 2,500,000 2. PURCHASED ON ACCOUNT 110,000 UNITS OF RAW MATERIALS AT $25.00 EACH 3. TRANSFERRED 100,000 UNITS TO WORK-IN-PROCESS 4. INCURRED 210,000 LABOR HOURS AT $20.00 PER HOUR TO BE PAID LATER (Hint: wages payable) 5. APPLIED MANUFACTURING OVERHEAD FOR 210,000 HOURS 6. COMPLETED 10000 UNITS WITH TOTAL LABOR AND MANUFACTURING OVERHEAD CHARGED TO 10000 COMPLETED UNITS 7. SOLD 9000 UNITS ON ACCOUNT 8. ACTUAL MANUFACTURING OVERHEAD INCURRED (Hint: Depreciation is not credited to cash) i. Depreciation 200,000 ii. Utilities 80,000 iii. Supplies 160,000 iv. Taxes 60,000 v. Insurance 50,000 9. PREPARE JOURNAL ENTRY FOR OVERAPPLIED / UNDERAPPLIED OVERHEAD IF ANY 10. SELLING EXPENSES INCURRED IS 10% OF TOTAL SALES PAID IN CASH 11. OFFICE EXPENSES INCURRED IS 1,000,000 PAID IN CASH

REQUIRED: 1. PREPARE STATEMENT OF RETAINED EARNINGS