Sampson Company uses a job order cost system with overhead applied to products based on direct labor hours. Based on previous history, the company estimated its total overhead for the coming year (2016) to be $720000 and its total direct labor hours to be 24000. On January 1, 2010 the general ledger of Sampson Company revealed that it had one job in process (Job 102) for which it had incurred a total cost of $15,000. Job 101 had been finished the previous month for a total cost of $30,000 but was not yet sold. The company had a contract for Job 103 but had not started working on it yet. Other balances in Raw Materials Inventory and other assets, liabilities, and owners equity accounts are summarized here :

SAMPSON COMPANY General Ledger Accounts Raw Material Inventory Date Description Dr Cr Balance 1/1 Balance 10,000 (Dr) Work In Process Inventory (WIP) Date Description Dr Cr Balance 1/1 Balance 15,000 (Dr) Sales Revenue Date Description Dr Cr Balance Cash and other assets Date Description Dr Cr Balance 1/1 Balance 100,000 (Dr) Manufacturing Overhead Date Description Dr Cr Balance Finished Goods Inventory Date Description Dr Cr Balance 1/1 Balance 30,000(Dr) Cost of Goods Sold Date Description Dr Cr Balance Selling and administrative Expenses Date Description Dr Cr Balance Payables and Other Liabilities Date Description Dr Cr Balance 1/1 Balance 85,000 (Cr) Stockholders Equity Date Description Dr Cr Balance 1/1 Balance 70,000 (Cr) Individual Job Cost Sheets (subsidiary ledgers to WIP) Job 102 Job 103 Beginning Balance 15,000 - + Direct Materials + Direct Labor + Applied OH Total Manufacturing Cost During January, the company had the following transactions: (a) Purchased $10,000 worth of raw materials on account (b) Issued the following materials into production: Item Cost Explanation Direct Materials $7,000 Job 102,$2,000; Job 103,$5,000 Indirect Materials 2,000 Used on both jobs Total material issued $9,000 ( c ) Recorded salaries and wages payable as follows : Item Cost Explanation Direct Labor $10,000 Job 102,$6,000; Job 103,$4,000 Indirect Labor 4,000 For Factory supervision Salaries 5,000 For administrative staff Total Payroll cost $19,000 (d) Applied overhead to jobs based on the number of direct labor hours required : Job number Direct Labor Hours Job 102 300 hours Job 103 200 hours Total 500 hours (e) Recorded the following actual manufacturing costs: Item Cost Explanation Rent $6,000 Paid factory rent in cash Depreciation 5,000 Factory Equipment Insurance 3,000 Had one month of factory insurance policy expire Utilities 2,000 Received factory utility bill but did not pay it Total Cost $16,000 (f) Recorded the following general and administrative cost : Item Cost Explanation Advertising $2,000 Advertising paid in cash Depreciation 3,000 Office Equipment Other expenses 1,000 Micellaneous expenses incurred but not paid. Total Cost $6,000 (g) Sold Job 101, which is recorded in Finished Goods Inventory at a cost of $30,000 for $55,000 (h) Completed Job 102 but did not sell it; Job 103 is still in process at year-end. Required :

4. Prepare journal entries to record the January transaction and post the entries to the general ledger T-accounts OR column accounts as given earlier in the problem.

6. Prepare the journal entry to dispose of the overhead balance assuming that it had been a year-end balance instead of a month-end balance. Post the effect to the general ledger T-accounts/column accounts.

7. Prepare a statement of cost of goods manufactured and sold report including the adjustment for over or underapplied overhead.

8. Prepare a brief income statement for Sampson Company

1.) Predetermined overhead rate: $720,000/24,000= $30 per direct labor hour
2.) Journal Entries
Account title	Debit	Credit
a. Raw Materials Inventory	10,000
Accounts Payable		10,000
b. Work in Process Inventory	7,000
Manufacturing Overhead	2,000
Raw Materials Inventory		9,000
c. Work in Process Inventory	10,000
Manufacturing Overhead	4,000
Salaries Expense	5,000
Salaries and Wages Payable		19,000
d. Work in Process Inventory	15,000
Manufacturing Overhead		15,000
e. Manufacturing Overhead	16,000
Rent		6,000
Accumalted Depreciation- Equipment		5,000
Prepaid Insurance		3,000
Accounts Payable		2,000
f. Advertising Expense	2,000
Depreciation Expense: Office Equip.	3,000
Miscellaneous Expense	1,000
Cash		2,000
Accumalted Depreciation- Office Equip.		3,000
Accured Liabilites		1,000
g. Accounts Recievable	55,000
Sales Revenue		55,000
g. Cost of goods sold	30,000
Finished Goods Inventory		30,000
I. Finished Goods Inventory	32,000
Work In Process Inventory		32,000
3.) Amount of overhead applied to jobs during period = $30 x 500 direct labor hours = $15,000

5.) Overhead	Column2
Manufacture overhead applied	15000
Manufacture overhead incurred (less)	16000
Over (under) applied of Man. Overhead	-1000
Under applied of Ma. Overhead	1000

General Ledger Accounts Manufacturing Overhead Raw Materials Inventory 10,000 1/1 Balance Work in Process Inventory (WIP) 15,000 Finished Goods Inventory 30,000 1/1 Balance 1/1 Balance Individual Job Cost Sheets (subsidiary ledgers to WIP) Cost of Goods Sold Job 103 Job 102 15,000 Beg. Balance + Direct Materials + Direct Labor + Applied OH Total Mfg. Cost Sales Revenue Selling, General, and Administrative Expenses Payables and Other Liabilities Cash and Other Assets 100,000 1/1 Balance 85,000 1/1 Balance Stockholders' Equity 70,000 1/1 Balance During January, the company had the following transactions: a. Purchased $10,000 worth of raw materials on account. b. Issued the following materials into production: Item Cost Explanation Direct materials $7,000 Job 102, $2,000; Job 103, $5,000 Indirect materials 2,000 Used on both jobs Total materials issued $9,000 c. Recorded salaries and wages payable as follows: Item Cost Explanation Direct labor $10,000 Job 102, $6,000; Job 103, $4,000 Indirect labor 4,000 For factory supervision Salaries 5,000 For administrative staff Total payroll cost $19.000 d. Applied overhead to jobs based on the number of direct labor hours required: Job Number Direct Labor Hours Job 102 300 hours Job 103 200 hours Total 500 hours Darded+1 of 112 ota. Toate aceta d. Applied overhead to jobs based on the number of direct labor hours required: Job Number Direct Labor Hours Job 102 300 hours Job 103 200 hours Total 500 hours e. Recorded the following actual manufacturing costs: Item Cost Explanation Rent $ 6,000 Paid factory rent in cash Depreciation 5,000 Factory equipment Insurance 3,000 Had one month of factory insurance policy expire Utilities 2,000 Received factory utility bill but did not pay it Total cost $ 16,000 f. Recorded the following general and administrative costs: Item Cost Explanation Advertising $2,000 Advertising paid in cash Depreciation 3,000 Office equipment Other expenses 1,000 Micellaneous expenses incurred but not paid Total cost $6,000 g. Sold Job 101, which is recorded in Finished Goods Inventory at a cost of $30,000, for $55,000. h. Completed Job 102 but did not sell it; Job 103 is still in process at year-end. General Ledger Accounts Manufacturing Overhead Raw Materials Inventory 10,000 1/1 Balance Work in Process Inventory (WIP) 15,000 Finished Goods Inventory 30,000 1/1 Balance 1/1 Balance Individual Job Cost Sheets (subsidiary ledgers to WIP) Cost of Goods Sold Job 103 Job 102 15,000 Beg. Balance + Direct Materials + Direct Labor + Applied OH Total Mfg. Cost Sales Revenue Selling, General, and Administrative Expenses Payables and Other Liabilities Cash and Other Assets 100,000 1/1 Balance 85,000 1/1 Balance Stockholders' Equity 70,000 1/1 Balance During January, the company had the following transactions: a. Purchased $10,000 worth of raw materials on account. b. Issued the following materials into production: Item Cost Explanation Direct materials $7,000 Job 102, $2,000; Job 103, $5,000 Indirect materials 2,000 Used on both jobs Total materials issued $9,000 c. Recorded salaries and wages payable as follows: Item Cost Explanation Direct labor $10,000 Job 102, $6,000; Job 103, $4,000 Indirect labor 4,000 For factory supervision Salaries 5,000 For administrative staff Total payroll cost $19.000 d. Applied overhead to jobs based on the number of direct labor hours required: Job Number Direct Labor Hours Job 102 300 hours Job 103 200 hours Total 500 hours Darded+1 of 112 ota. Toate aceta d. Applied overhead to jobs based on the number of direct labor hours required: Job Number Direct Labor Hours Job 102 300 hours Job 103 200 hours Total 500 hours e. Recorded the following actual manufacturing costs: Item Cost Explanation Rent $ 6,000 Paid factory rent in cash Depreciation 5,000 Factory equipment Insurance 3,000 Had one month of factory insurance policy expire Utilities 2,000 Received factory utility bill but did not pay it Total cost $ 16,000 f. Recorded the following general and administrative costs: Item Cost Explanation Advertising $2,000 Advertising paid in cash Depreciation 3,000 Office equipment Other expenses 1,000 Micellaneous expenses incurred but not paid Total cost $6,000 g. Sold Job 101, which is recorded in Finished Goods Inventory at a cost of $30,000, for $55,000. h. Completed Job 102 but did not sell it; Job 103 is still in process at year-end