Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following Balance Sheet was taken from the records of Gibson Manufacturing Company at the beginning of Year 3 . Balance Sheet as of January

The following Balance Sheet was taken from the records of Gibson Manufacturing Company at the beginning of Year 3.
Balance Sheet as of January 1, Year 2
Assets
Cash $ 9,440
Raw materials inventory 790
Work in process inventory 1,220
Finished goods inventory 2,140
Property, plant, and equipment 13,100
Accumulated depreciation 5,240
Total Assets $ 21,450
Stockholders' Equity
Common stock 8,500
Retained earnings 12,950
Total Stockholders' Equity $ 21,450
Transactions for the Accounting Period
Gibson purchased $6,400 of direct raw materials and $310 of indirect raw materials on account. The indirect materials are capitalized in the Production Supplies account. Materials requisitions showed that $6,100 of direct raw materials had been used for production during the period. The use of indirect materials is determined at the end of the year by physically counting the supplies on hand.
By the end of the year, $5,280 of the accounts payable had been paid in cash.
During the year, direct labor amounted to 950 hours recorded in the Wages Payable account at $10.10 per hour.
By the end of the year, $8,695 of wages payable had been paid in cash.
At the beginning of the year, the company expected overhead cost for the period to be $6,100 and 1,000 direct labor hours to be worked. Overhead is allocated based on direct labor hours, which, as indicated in Event 3, amounted to 950 for the year.
Selling and administrative expenses for the year amounted to $940 paid in cash.
Utilities and rent for production facilities amounted to $4,690 paid in cash.
Depreciation on the plant and equipment used in production amounted to $1,510.
There was $11,300 of goods completed during the year.
There was $12,450 of finished goods inventory sold for $18,500 cash.
A count of the production supplies revealed a balance of $93 on hand at the end of the year.
Any over- or underapplied overhead is considered to be insignificant.
Required
a. Prepare T-accounts with the beginning balances shown in the preceding list and record all transactions for the year including closing entries in the T-accounts.
the T-accounts.
image text in transcribed

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

Economics In Minutes 200 Key Concepts Explained In An Instant

Authors: Niall Kishtainy

1st Edition

1782066470, 9781782066477

More Books

Students also viewed these Accounting questions