Question
URGENT Ateeq Generators is a manufacturer of power generating equipment for commercial and industrial use. It commenced business on December 1. Below is a list
URGENT
Ateeq Generators is a manufacturer of power generating equipment for commercial and industrial use. It commenced business on December 1. Below is a list of transactions conducted during its first month of operations:
Transaction |
| $ |
1 | Materials were purchased on credit terms. | 400,000 |
2 | Direct material was issued for Job A (for the manufacture of mobile generators). | 89,000 |
3 | Direct material was issued for Job B (for the manufacture of diesel generators). | 141,000 |
4 | Direct material was issued for Job C (for the manufacture of portable generators). | 28,000 |
5 | Incurred direct labour cost on each of the jobs mentioned above as follows: job A, $9,000; job B, $11,000; job C, $5,000. |
|
6 | Manufacturing overhead was applied to the jobs. The overhead rate used is 300% of direct labour dollars. |
|
7 | Job A and Job C were completed and moved to the finished goods warehouse. |
|
8 | Job A was sold on credit terms for $200,000. |
|
9 | Actual manufacturing overhead incurred and paid for he month amounted to $78,000. |
|
10 | Manufacturing overhead was closed to Cost of Goods Sold. |
|
a. Prepare the journal entries for the following transactions ONLY: [3 marks]
Transactions 2, 6, 7
b. Compute the Cost of Goods Manufactured (COGM) for the month ended December 31. [1 mark]
c. Compute the Cost of Goods Sold (COGS) for the month ended December 31. [1 mark]
d. Compute the inventory balances reported in the companys Statement of Financial Position at December 31. [NO NEED TO ADJUST FOR UNDER- or OVER- APPLIED OVERHEADS] [3 marks]
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