UltraLift Corp. manufactures chain hoists. The raw materials inventories on hand on October 1 were as follows:

Chain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,000 lb, $24,000

Pulleys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 sets, $20,000

Bolts and taps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000 lb, $5,000

Steel plates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000 units, $2,000

The balances in the ledger accounts on October 1 were as follows:

Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $12,000

Work in process. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000

Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,000

Prepaid insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000

Machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125,000

Transactions during October were as follows:
a. Payroll recorded during the month: direct labor, $28,000; indirect labor, $4,800.
b. Indirect materials purchased for cash, $1,000.
c. Materials purchased on account: chain–4,000 lb, $8,800; pulleys–2,000 sets, $10,200; steel plates–5,000 units, $3,000.
d. Sales on account for the month, $126,375.
e. Accounts receivable collected, $72,500.
f. Materials used during October (FIFO costing): chain–14,000 lb; pulleys–4,400 sets; bolts and taps–4,000 lb; steel plates–3,800 units.
g. Payroll paid, $32,800.
h. Indirect materials issued to production in October, $650.
i. Factory heat, light, and power costs for October, $3,000 (not yet paid).
j. Office salaries paid, $6,000.
k. Advertising paid, $2,000.
l. Accounts payable paid, $33,750.
m. Expired insurance–on office equipment, $100; on factory machinery, $300.
n. Factory rent paid, $2,000.
o. Depreciation on office equipment, $400; on office furniture, $180; on machinery, $1,200.
p. Factory overhead charged to jobs, $11,950.
q. Work in Process, October 31, $31,000.
r. Cost of goods sold during the month, $84,250.

Required:
1. Set up T-accounts and enter the balances as of October 1.
2. Prepare journal entries to record each of the previous transactions.
3. Post the journal entries to the accounts, setting up any new ledger accounts necessary. Only controlling accounts are to be maintained; however, show the calculation for the cost of materials used.
4. Prepare a statement of cost of goods manufactured for October.
5. Prepare an income statement.
6. Prepare a balance sheet showing the classifications of current assets, plant and equipment, current liabilities, and stockholders’ equity.

Transcribed Image Text:

Accumulated depreciation-machinery . $10,500 Accumulated depreciation-office equipment.. .. Office furniture.. Accumulated depreciation-office furniture. . . 4,800 20,000 2,500 30,000 182,200 46,000 $276,000 Capital stook $276,000