Managerial Accounting, 16e (Garrison)
Appendix 3A Job-Order Costing: A Microsoft Excel-Based Approach
1) In the Excel, or spreadsheet, approach to recording financial transactions, raw material
purchases on account are recorded as increases in the Raw Materials inventory column and
decreases in the Accounts Payable column.
2) In the Excel, or spreadsheet, approach to recording financial transactions, cash paid to
creditors is recorded as a decrease in the Cash column and as a decrease in the Retained Earnings
column.
3) In the Excel, or spreadsheet, approach to recording financial transactions, expired insurance
coverage on factory equipment is recorded as a decrease in the Prepaid Insurance column and as
a decrease in the Retained Earnings column.
4) In the Excel, or spreadsheet, approach to recording financial transactions, an advertising
expense paid in cash is recorded as a decrease in the Cash column and as a decrease in the
Retained Earnings column.
5) In the Excel, or spreadsheet, approach to recording financial transactions, direct labor paid in
cash is recorded as a decrease in the Cash column and as an increase in the Work in Process
column.
6) In the Excel, or spreadsheet, approach to recording financial transactions, indirect labor paid
in cash is recorded as a decrease in the Cash column and as an increase in the Work in Process
column.
7) In the Excel, or spreadsheet, approach to recording financial transactions, manufacturing
overhead applied is recorded as an increase in the Work in Process column and as a decrease in
the Manufacturing Overhead column.
8) In the Excel, or spreadsheet, approach to recording financial transactions, the cost of goods
sold is recorded as a decrease in the Finished Goods column and as a decrease in the Retained
Earnings column.
9) In the Excel, or spreadsheet, approach to recording financial transactions, any transactions
involving sales or expenses will be recorded in the Net Income column of the balance sheet.
10) In the Excel, or spreadsheet, approach to recording financial transactions, if manufacturing
overhead is underapplied by X dollars, the Manufacturing Overhead account is closed out by
deducting X dollars in the Manufacturing Overhead column and deducting X dollars in the
Retained Earnings column.
11) In the Excel, or spreadsheet, approach to recording financial transactions, factory
depreciation is recorded as a decrease in the Property, Plant, and Equipment column and as a
decrease in the Retained Earnings column.
12) In the Excel, or spreadsheet, approach to recording financial transactions, work in process
that has been completed is recorded as a decrease in the Work in Process column and as an
increase in the Cost of Goods Sold column.
13) In the Excel, or spreadsheet, approach to recording financial transactions, the revenues and
expenses on the income statement can be determined by summing each column.
14) In the Excel, or spreadsheet, approach to recording financial transactions, the Manufacturing
Overhead account is used to record two things—all actual overhead expenses and the amount of
manufacturing overhead applied to production using the predetermined overhead rate.
15) In the Excel, or spreadsheet, approach to recording financial transactions, factory utility costs
paid in cash are recorded as a decrease in the Cash column and as an increase in the
Manufacturing Overhead column.
16) The equation “Ending balance in retained earnings = Beginning balance in retained earnings
+ Net operating income – Dividends” highlights the connection between the balance sheet and
income statement and recognizes the fact that net operating income is essentially embedded
within retained earnings on the balance sheet.
7
17) Venzke Corporation uses a job-order costing system to assign manufacturing costs to jobs.
At the end of the month it closes out any overapplied or underapplied manufacturing overhead to
Cost of Goods Sold. Its balance sheet on January 1 appears below:
Venzke Corporation
Balance Sheet
January 1
Assets:
Cash
$13,000
Raw materials
$8,000
Work in process
14,000
Finished goods
18,000
40,000
Property, plant, and equipment (net)
243,000
Total assets
$296,000
Liabilities and Stockholders’ Equity:
Accounts payable
$10,000
Retained earnings
286,000
Total liabilities and stockholders’ equity
$296,000
Summaries of the transactions completed during January appear below:
(1)
Raw materials purchased on account
(2)
Raw materials used in production (direct materials)
(3)
Raw materials used in production (indirect materials)
(4)
Direct labor paid in cash
(5)
Indirect labor paid in cash
(6)
Selling and administrative salaries paid in cash
(7)
Factory utility costs (on account)
(8)
Depreciation on PP&E—manufacturing equipment
(9)
Depreciation on PP&E—selling and administration
(10)
Advertising expenses paid in cash
(11)
Manufacturing overhead applied to production
(12)
Cost of goods manufactured
(13)
Cash sales
(14)
Cost of goods sold
(15)
Cash payments to creditors
(16)
Overapplied (underapplied) overhead
8
Required:
a. Completely fill in the spreadsheet below. Because the page is too narrow to accommodate all
of the columns, the spreadsheet has been divided into two parts that should be side by side.
Transactions
Cash
Raw
Materials
Work in
Process
Beginning balances, January 1
(1)
Raw materials purchased on account
(2)
Raw materials used in production (direct
materials)
(3)
Raw materials used in production (indirect
materials)
(4)
Direct labor paid in cash
(5)
Indirect labor paid in cash
(6)
Selling and administrative salaries paid in cash
(7)
Factory utility costs (on account)
(8)
Depreciation on PP&E—manufacturing
equipment
(9)
Depreciation on PP&E—selling and
administration
(10)
Advertising expenses paid in cash
(11)
Manufacturing overhead applied to production
(12)
Cost of goods manufactured
(13)
Cash sales
(14)
Cost of goods sold
(15)
Cash payments to creditors
(16)
Overapplied (underapplied) overhead
Ending balances at January 31
9
Finished
Goods
Manufact
-uring
Overhead
PP&E (net)
=
Accounts
Payable
Retained
Earnings
=
(1)
=
(2)
=
(3)
=
(4)
=
(5)
=
(6)
=
(7)
=
(8)
=
(9)
=
(10)
=
(11)
=
(12)
=
(13)
=
(14)
=
(15)
=
(16)
=
b. Prepare a Balance Sheet for the company for January 31.
13
18) Angeloni Corporation uses a job-order costing system to assign manufacturing costs to jobs.
At the end of the month it closes out any overapplied or underapplied manufacturing overhead to
Cost of Goods Sold. Its balance sheet on July 1 appears below:
Angeloni Corporation
Balance Sheet
July 1
Assets:
Cash
$12,000
Raw materials
$6,000
Work in process
13,000
Finished goods
16,000
35,000
Property, plant, and equipment (net)
234,000
Total assets
$281,000
Liabilities and Stockholders’ Equity:
Retained earnings
$281,000
Total liabilities and stockholders’ equity
$281,000
Summaries of the transactions completed during July appear below:
(1)
Raw materials purchased for cash
(2)
Raw materials used in production (direct materials)
(3)
Raw materials used in production (indirect materials)
(4)
Direct labor paid in cash
(5)
Indirect labor paid in cash
(6)
Selling and administrative salaries paid in cash
(7)
Factory utility costs paid in cash
(8)
Depreciation on PP&E—manufacturing equipment
(9)
Depreciation on PP&E—selling and administration
(10)
Advertising expenses paid in cash
(11)
Manufacturing overhead applied to production
(12)
Cost of goods manufactured
(13)
Cash sales
(14)
Cost of goods sold
(15)
Overapplied (underapplied) overhead
14
Required:
a. Completely fill in the spreadsheet below. Because the page is too narrow to accommodate all
of the columns, the spreadsheet has been divided into two parts that should be side by side.
Transactions
Cash
Raw
Materials
Work in
Process
Beginning balances, July 1
(1)
Raw materials purchased for cash
(2)
Raw materials used in production (direct
materials)
(3)
Raw materials used in production (indirect
materials)
(4)
Direct labor paid in cash
(5)
Indirect labor paid in cash
(6)
Selling and administrative salaries paid in
cash
(7)
Factory utility costs paid in cash
(8)
Depreciation on PP&E—manufacturing
equipment
(9)
Depreciation on PP&E—selling and
administration
(10)
Advertising expenses paid in cash
(11)
Manufacturing overhead applied to
production
(12)
Cost of goods manufactured
(13)
Cash sales
(14)
Cost of goods sold
(15)
Overapplied (underapplied) overhead
Ending balances at July 31
15
Finished
Goods
Manufact-
uring
Overhead
PP&E (net)
=
Retained
Earnings
=
(1)
=
(2)
=
(3)
=
(4)
=
(5)
=
(6)
=
(7)
=
(8)
=
(9)
=
(10)
=
(11)
=
(12)
=
(13)
=
(14)
=
(15)
=
b. Prepare a Schedule of Cost of Goods Sold for the company for July.
c. Prepare an Income Statement for the company for July.
19
19) Sandra Corporation uses a job-order costing system to assign manufacturing costs to jobs. At
the end of the month it closes out any overapplied or underapplied manufacturing overhead to
Cost of Goods Sold. Its balance sheet on January 1 appears below:
Sandra Corporation
Balance Sheet
January 1
Assets:
Cash
$17,000
Raw materials
$7,000
Work in process
11,000
Finished goods
16,000
34,000
Property, plant, and equipment (net)
218,000
Total assets
$269,000
Liabilities and Stockholders’ Equity:
Retained earnings
$269,000
Total liabilities and stockholders’ equity
$269,000
Summaries of the transactions completed during January appear below:
(1)
Raw materials purchased for cash
(2)
Raw materials used in production (direct materials)
(3)
Raw materials used in production (indirect materials)
(4)
Direct labor paid in cash
(5)
Indirect labor paid in cash
(6)
Selling and administrative salaries paid in cash
(7)
Factory utility costs paid in cash
(8)
Depreciation on PP&E—manufacturing equipment
(9)
Depreciation on PP&E—selling and administration
(10)
Advertising expenses paid in cash
(11)
Manufacturing overhead applied to production
(12)
Cost of goods manufactured
(13)
Cash sales
(14)
Cost of goods sold
(15)
Overapplied (underapplied) overhead
20
Required:
Completely fill in the spreadsheet below. Because the page is too narrow to accommodate all of
the columns, the spreadsheet has been divided into two parts that should be side by side.
Transactions
Cash
Raw
Materials
Work in
Process
Beginning balances, January 1
(1)
Raw materials purchased for cash
(2)
Raw materials used in production (direct
materials)
(3)
Raw materials used in production (indirect
materials)
(4)
Direct labor paid in cash
(5)
Indirect labor paid in cash
(6)
Selling and administrative salaries paid in
cash
(7)
Factory utility costs paid in cash
(8)
Depreciation on PP&E—manufacturing
equipment
(9)
Depreciation on PP&E—selling and
administration
(10)
Advertising expenses paid in cash
(11)
Manufacturing overhead applied to production
(12)
Cost of goods manufactured
(13)
Cash sales
(14)
Cost of goods sold
(15)
Overapplied (underapplied) overhead
Ending balances at January 31