Ex.  116

Manufacturing cost data for Dolan Company, which uses a job order cost system, are presented below:

Case A                 Case B

Direct Materials Used                                       (a)                  $103,000

Direct Labor                                              $  70,000                 140,000

Manufacturing Overhead Applied                63,000                       (d)

Total Manufacturing Costs                         240,000                       (e)

Work in Process, 1/1/02                                   (b)                      45,000

Total Cost of Work in Process                    300,000                       (f)

Work in Process, 12/31/02                               (c)                      40,000

Cost of Goods Manufactured                     205,000                       (g)

 

Instructions

Indicate the missing amount for each letter. Assume that overhead is applied on the basis of direct labor cost and that the rate is the same for both cases.

 

Ex.  117

Gray Corporation had the following transactions during its first month of operations:

1.   Purchased raw materials on account, $85,000.

2.   Raw materials of $30,000 were requisitioned to the factory. An analysis of the materials requisition slips indicated that $6,000 was classified as indirect materials.

3.   Factory labor costs incurred were $95,000 of which $84,000 pertained to factory wages payable and $11,000 pertained to employer payroll taxes payable.

4.   Time tickets indicated that $80,000 was direct labor and $15,000 was indirect labor.

5.   Overhead costs incurred on account were $96,000.

6.   Manufacturing overhead was applied at the rate of 150% of direct labor cost.

7.   Goods costing $115,000 are still incomplete at the end of the month; the other goods were completed and transferred to finished goods.

8.   Finished goods costing $90,000 to manufacture were sold on account for $120,000.

 

Instructions

Journalize the above transactions for Gray Corporation.

Ex.  118

Watson Manufacturing Company employs a job order cost accounting system and keeps perpetual inventory records. The following transactions occurred in the first month of operations:

 

1.   Direct materials requisitioned during the month:

Job 101                $22,000

Job 102                  16,000

Job 103                  24,000

$62,000

 

2.   Direct labor incurred and charged to jobs during the month was:

Job 101                $30,000

Job 102                  26,000

Job 103                  20,000

$76,000

 

3.   Manufacturing overhead was applied to jobs worked on using a predetermined overhead rate based on 75% of direct labor costs.

 

4.   Actual manufacturing overhead costs incurred during the month amounted to $66,000.

 

5.   Job 101 consisting of 1,000 units and Job 103 consisting of 200 units were completed during the month.

Ex.  118  (cont.)

Instructions

(a)   Prepare journal entries to record the above transactions.

(b)   Answer the following:

1.    How much manufacturing overhead was applied to Job 103 during the month?

2.    Compute the unit cost of Jobs 101 and 103.

3.    What is the balance in Work In Process Inventory at the end of the month?

4.    Determine if manufacturing overhead was under- or overapplied during the month. How much?

Ex.  119

The following inventory information is available for Ricci Manufacturing Corporation for the year ended December 31, 2002:

Beginning                 Ending

Inventories:

Raw materials                                    $17,000                 $19,000

Work in process                                     9,000                   14,000

Finished goods                                     11,000                     8,000

Total                                             $37,000                 $41,000

 

In addition, the following transactions occurred in 2002:

1.   Raw materials purchased on account, $75,000.

2.   Incurred factory labor, $80,000, all is direct labor. (Credit Factory Wages Payable).

3.   Incurred the following overhead costs during the year: Utilities $6,800, Depreciation on manufacturing machinery $8,000, Manufacturing machinery repairs $6,200, Factory insurance $9,000 (Credit Accounts Payable and Accumulated Depreciation).

4.   Assigned $80,000 of factory labor to jobs.

5.   Applied $32,000 of overhead to jobs.

 

Instructions

(a)   Journalize the above transactions.

(b)   Reproduce the manufacturing cost and inventory accounts.  Use T-accounts.

(c)   From an analysis of the accounts, compute the following:

1.   Raw materials used.

2.   Completed jobs transferred to finished goods.

3.   Cost of goods sold.

4.   Under- or overapplied overhead.

Ex.  120

Job cost sheets for Howard Manufacturing are as follows:

 

 

Job No 210                                                                             Quantity    1,500

 

Manufacturing

Date        Direct Materials              Direct Labor                Overhead

July   1               7,000                           8,000                         12,000

8               7,800

10                                                 10,000

15               6,500

25                                                 15,000

 

Job No 211                                                                             Quantity    1,200

 

Manufacturing

Date        Direct Materials              Direct Labor                Overhead

July   1               4,000                           6,000                           9,000

10               9,000

15                                                   8,000

20               7,000

27                                                 12,000

Ex.  120  (cont.)

Instructions

(a)   Answer the following questions:

1.  What was the balance in Work in Process Inventory on July 1 if these were the only unfinished jobs?

2.  What was the predetermined overhead rate in June if overhead was applied on the basis of direct labor cost?

3.  If July is the start of a new fiscal year and the overhead rate is 20% higher than in the preceding year, how much overhead should be applied to Job 210 in July?

4.  Assuming Job 210 is complete, what is the total and unit cost of the job?

5.  Assuming Job 211 is the only unfinished job at July 31, what is the balance in Work in Process Inventory on this date?

 

(b)   Journalize the summary entries to record the assignment of costs to the jobs in July.             (Note: Make one entry in total for each manufacturing cost element.)

 

 

Ex.  121

Garner Company begins operations on July 1, 2002. Information from job cost sheets shows the following:

Manufacturing Costs Assigned

Job No.                          July                                 August                            September

100                          $12,000                               $8,800

101                              7,800                                 9,700                             $12,000

102                              5,000

103                                                                      11,800                                 6,000

104                                                                        5,800                                 7,000

 

Job 102 was completed in July.  Job 100 was completed in August, and Jobs 101 and 103 were completed in September. Each job was sold for 60% above its cost in the month following completion.

 

Instructions

(a)     Compute the balance in Work in Process Inventory at the end of July.

(b)     Compute the balance in Finished Goods Inventory at the end of September.

(c)     Compute the gross profit for August.

 

Ex.  122

The accounting records of Roland Manufacturing Company include the following information:

Dec. 31                         Jan. 1

Work in process inventory                        $  20,000                     $  50,000

Finished goods inventory                            120,000                       140,000

Direct materials used                                  350,000

Direct labor                                                 160,000

Selling expenses                                         125,000

 

Manufacturing overhead is applied at a rate of 150% of direct labor cost.

 

Ex.  122  (cont.)

Instructions

Answer the following questions:

1.   What are the total of the debits to Work in Process Inventory during the year?

2.   What is the amount transferred to Finished Goods Inventory during the year?

3.   What is the cost of goods sold?

 

Ex.  123

Stoll Manufacturing, Inc. uses a job order costing system. The company uses predetermined overhead rates in applying manufacturing overhead to individual jobs. The predetermined overhead rate in Department X is based on direct labor hours, the rate in Department Y is based on machine hours, and the rate in Department Z is based on direct labor cost. At the beginning of the most recent year, members of Stoll’s management team made the following estimates for the year:

Department

X                      Y                      Z

Direct labor hours                                                  80,000             26,000             60,000

Machine hours                                                       50,000             85,000             23,000

Direct labor cost                                                 $400,000         $150,000         $800,000

Direct materials                                                  $200,000         $  26,000         $  42,000

Manufacturing overhead                                   $560,000         $340,000         $240,000

 

a.   Compute the predetermined overhead rates for Departments X, Y, and Z.

 

Ex.  123  (cont.)

b.   Stoll Manufacturing’s records show the following information for Job #6854, which was entered into production on January 17 and completed on March 7.

Department

X                      Y                      Z

Direct labor hours                                                      420                    54                  375

Machine hours                                                           200                  120                  125

Direct labor cost                                                   $2,400             $1,080             $1,390

Direct materials                                                    $   842             $1,260             $2,065

 

Compute the total manufacturing overhead applied to Job #6854.

 

c.   On December 31, Stoll showed the following actual costs and operating data for all jobs worked on during the year:

Department

X                      Y                      Z

Direct labor hours                                                  76,000             28,920             63,000

Machine hours                                                       54,000             87,200             21,000

Direct labor cost                                                 $395,200         $138,000         $815,000

Direct materials                                                  $215,900         $  24,380         $  39,080

Manufacturing overhead                                   $540,000         $345,000         $254,000

 

Compute the amount of under- or overapplied overhead in each department at the end of the year and indicate whether it is under- or overapplied.

Ex.  124

Mr. J. G. Pigg, III is the sole owner of a brick company that manufactures custom bricks used in upscale homes. No two customers have the same type of bricks. The bricks go through three processes: mixing, shaping, and firing. The company uses a job order cost system and computes a predetermined overhead rate in each department. The mixing department bases its rate on direct materials, the shaping department bases its rate on machine hours, and the firing department bases its rate on direct labor hours. At the beginning of the year, the company made the following estimates:

Department

Mixing               Shaping              Firing

Direct labor hours                                           80,000                45,000            60,000

Machine hours                                                30,000                70,000            21,000

Direct materials                                          $300,000            $  40,000          $15,000

Manufacturing overhead                            $150,000            $140,000          $75,000

 

a.   Compute the predetermined overhead rate to be used in each department during the upcoming year.

 

b.   Assume the overhead rates that you computed in a. above are in effect.  Compute the total overhead cost to be assigned to Dr. Snout’s order—Job #5417, assuming the following data:

 

Department

Mixing               Shaping              Firing

Direct labor hours                                              300                         80                   92

Machine hours                                                     80                       120                 120

Direct materials                                             $6,000                     $120               $300

 

c.   If actual overhead incurred totaled $3,500, compute the amount of over- or underapplied manufacturing overhead.

 

Ex.  125

Landis Company uses a job order cost system in each of its two manufacturing departments. Manufacturing overhead is applied to jobs on the basis of direct labor cost in Department A and machine hours in Department B.

 

In establishing the predetermined overhead rates for 2002, the following estimates were made for the year:

Department

A                                  B

Manufacturing overhead                                $2,100,000                  $1,600,000

Direct labor cost                                                1,200,000                    1,200,000

Direct labor hours                                                100,000                       100,000

Machine hours                                                     200,000                       400,000

 

During January, the job cost sheet showed the following costs and production data:

Department

A                                 B

Direct materials used                                         $195,000                     $128,000

Direct labor cost                                                   100,000                       110,000

Manufacturing overhead incurred                       180,000                       135,000

Direct labor hours                                                    8,000                           8,400

Machine hours                                                       16,000                         34,000

 

Instructions

(a)    Compute the predetermined overhead rate for each department.

(b)    Compute the total manufacturing cost assigned to jobs in January in each department.

 

(c)    Compute the balance in the Manufacturing Overhead account at the end of January and indicate whether overhead is over- or underapplied.

 

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Assets are listed on the balance sheet in order of their

A. purchase date.

B. balance.

C. liquidity.

D. adjustments.

Which of the following accounts would be included in the​ property, plant, and equipment category of the classified balance​ sheet?

A. Accumulated Depreciation

B. Office Supplies

C. Mortgage Payable

D. Land held for investment

Which situation indicates a net loss within the Income Statement section of the​ worksheet?

A. Total debits exceed total credits

B. Total credits exceed total debits

C. Total debits equal total credits

D. None of the above

Which of the following accounts is not​ closed?

A. Dividends

B. Accumulated Depreciation

C. Service Revenue

D. Depreciation Expense

What do closing entries​ accomplish?

A. Bring the Retained Earnings account to its correct ending balance

B. Zero out the​ revenues, expenses, and dividends

C. Transfer​ revenues, expenses, and dividends to the Retained Earnings account

D. All of the above

Which of the following is not a closing​ entry?

 

Date

Accounts   and Explanation

Debit

Credit

 

Retained Earnings

xxx

 

Dividends

xxx

B.

 

Income Summary

xxx

 

Rent Expense

xxx

C.

 

Service Revenue

xxx

 

Income Summary

xxx

D.

 

Salaries Payable

xxx

 

Income Summary

xxx

Which of the following accounts may appear on a​ post-closing trial​ balance?

​A. Cash, Salaries​ Payable, and Retained Earnings

B. ​Cash, Service​ Revenue, and Salaries Expense

C. ​Cash, Salaries​ Payable, and Salaries Expense

D. ​Cash, Salaries​ Payable, and Service Revenue

Which of the following steps of the accounting cycle is not completed at the end of the​ period?

A. Prepare the​ post-closing trial balance.

B. Journalize transactions as they occur.

C. Prepare the financial statements.

D. Journalize and post the closing entries.

Hair​ Stylists’ adjusted trial balance follows. Prepare Dalton​’s income statement for the year ended December 31, 2018

Hair​ Stylists’ adjusted trial balance and income statement follow. Prepare Dalton’s statement of retained earnings for the year ended December 31, 2018.

Enter any increases in retained earnings prior to the subtotal and any decreases to retained earnings below the subtotal. ​(For amounts with a​ $0 balance, make sure to enter​ “0” in the appropriate​ cell.)

Dalton Hair​ Stylists’s adjusted trial balance follows. Prepare Dalton​’s classified balance sheet at December 31​, 2018.

Assume the Notes Payable is due on December​ 1, 2025

Use the report form.

Begin by preparing the asset section of the balance​ sheet, then prepare the liabilities section and finally the​ stockholders’ equity section. ​(You must compute the ending balance of Retained Earnings. If a box is not used in the balance​ sheet, leave the box​ empty; do not select a label or enter a​ zero.)

A partial worksheet for Ramey Law Firm is presented below. Solve for the missing information.

Begin by solving the missing information for the account title and Income Statement​ columns, then solve for the missing information in the Balance Sheet columns.

A partial worksheet for Aaron Adjusters is presented below. Solve for the missing information.

Begin by solving the missing information for the account title and Income Statement​ columns, then solve for the missing information in the Balance Sheet columns.

For each account​ listed, identify whether the account is a temporary account​ (T) or a permanent account​ (P).

The adjusted trial balance for Green Advertising Services is presented​ below:

Requirement 1. Prepare the income statement for the year ending December 31​, 2018

Requirement 2. Prepare the statement of retained earnings for the year ending December 31​, 2018

Requirement 3. Prepare the classified balance sheet as of December 31​, 2018.

Use the account form.

Begin by preparing the asset section of the balance sheet and then prepare the liabilities and​ stockholders’ equity sections. ​(If a box is not used in the balance​ sheet, leave the box​ empty; do not select a label or enter a zero. Abbreviation​ used: Accum.​ = Accumulated.)

The adjusted trial balance of Stone Sign Company​ follows:

1. Assume Stone Sign Company has a January 31 ​year-end. Journalize Stone’s closing entries at January 31.

2. How much net income or net loss did Stone Sign Company earn for the year ended January 31​?

How can you​ tell?

(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

​First, close revenues.

​Next, close the expense accounts.

Close the Income Summary account.

​Finally, close the Dividends account.

Requirement 2. How much net income or net loss did Stone Sign Company earn for the year ended January

​31? How can you​ tell?

Elmer, CPA, had the following partial​ worksheet:

Requirement 1. Complete the worksheet. Complete the worksheet by preparing the Income Statement and Balance Sheet columns. Be sure to calculate the total debits and credits in each step.

Requirement 2. Prepare the closing entries for Cynthia Elmer, CPA. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Start by closing revenues.

​Mark’s Bowling​ Alley’s adjusted trial balance as of December 31, 2018, is presented​ below:

Requirement 1. Prepare the closing entries for Mark​’s Bowling Alley. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Start by closing revenues.

Requirement 2. Prepare a​ post-closing trial balance.

Requirement 3. Compute the current ratio for Mark​’s Bowling Alley. Select the​ labels, enter the​ amounts, then compute the current ratio. ​(Round your answer to two decimal​ places.)

The adjusted trial balance of Boston Irrigation System at December 31, 2018, follows:.

Requirement 1. Prepare the​ company’s income statement for the year ended December 31, 2018

.

​(If a box is not used in the​ statement, leave the box​ empty; do not select a label or enter a zero. Use a minus sign or parentheses to show a net​ loss.)

Requirement 2. Prepare the​ company’s statement of retained earnings for the year ended December 31, 2018

.

Enter any increases in retained earnings prior to the subtotal and any decreases to retained earnings below the subtotal.

Requirement 3. Prepare the​ company’s classified balance sheet in report form at December 31, 2018

.

​(If a box is not used in the balance​ sheet, leave the box​ empty; do not select a label or enter a​ zero.)

Requirement 4. Journalize the closing entries for Boston Irrigation System. ​(Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.)

Start by closing revenues.

Requirement 5. Compute the​ company’s current ratio at December 31 comma 2018

At December 31, 2017, the current ratio was 2.3

Did the​ company’s ability to pay debts improve or​ deteriorate, or did it remain the​ same?

Select the labels then enter the amounts and compute the current ratio. ​(Round your answer to two decimal​ places.)

Since the current ratio was 2.3 one year​ ago, Boston’s ability to pay its current liabilities has

The unadjusted trial balance of Fleming Investment Advisers at December 31, 2018

 

2.

Prepare the income​ statement, the   statement of retained​ earnings, and the classified balance sheet in account   format.

 

3.

Prepare closing entries.

Requirement 1. Prepare a worksheet for Fleming Investment Advisers at December 31, 2018

.

The unadjusted balances have been entered for you in the trial balance columns of a worksheet. Complete the worksheet one section at a time beginning with the Adjustments section. Enter the adjustments along with the adjustment letter references long dash (a), (b), (c), etc.long dash into the columns as appropriate. In the following​ step, complete the Adjusted Trial Balance.​ Lastly, complete the worksheet by preparing the Income Statement and Balance Sheet columns. Be sure to calculate the total debits and credits in each step. ​(Abbreviations used: Depr.​ = depreciation, Exp.​ = expense,​ l/t = long​ term, Pay.​ = payable, Rec.​ = receivable, Stk.​ = stock, and Supp.​ = supplies.)

Requirement 2. Prepare the income​ statement, the statement of retained​ earnings, and the classified balance sheet in account format. Begin by preparing the income statement. Review the Income Statement columns of the worksheet completed in Requirement 1.

Prepare the statement of retained earnings. Enter any increases in retained earnings prior to the subtotal and any decreases to retained earnings below the subtotal.  Review the Balance Sheet columns of the worksheet completed in Requirement 1.

Prepare the classified balance sheet in account format on December31, 2018.

​(If a box is not used in the balance​ sheet, leave the box​ empty; do not select a label or enter a​ zero.)

Review the Balance Sheet columns of the worksheet completed in Requirement 1.

Review the Statement of Retained Earnings completed above.

Requirement 3. Prepare closing entries.​ (Record debits​ first, then credits. Select the explanation on the last line of the journal entry​ table.) Start by closing revenues. Review the Income Statement columns of the worksheet completed in Requirement 1.

Close expenses for the period. Review the Income Statement columns of the worksheet completed in Requirement 1.

Close Income Summary. Review the Income Statement columns of the worksheet completed in Requirement 1.

Close Dividends. Review the Balance Sheet columns of the worksheet completed in Requirement 1.

 

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