PROBLEM 26.1B
Work in Process, January 1 30 0 0 0 00
Raw Materials
Manufacturing Overhead
Depreciation-Factory Assets 900000
Indirect Labor 36 0 0 0 00
Indirect Materials 500000
Statement of Cost of Goods Manufactured
Year Ended December 31, 2013
Faulkner Manufacturing Company
PROBLEM 26.1B (continued)
Revenue
Operating Expenses
Selling Expenses
Sales Salaries Expense 100 0 0 0 00
Payroll Taxes Expense—Sales Salaries 10 0 0 0 00
Other Selling Expense 12 0 0 0 00
Total Selling Expenses 122 0 0 0 00
Faulkner Manufacturing Company
Income Statement
Year Ended December 31, 2013
PROBLEM 26.2B
Square Company
Worksheet
Year Ended December 31, 2013
1Cash 4000000
2 Accounts Receivable 80 0 0 0 00
9 Land 50 0 0 0 00
10 Factory Building 150 0 0 0 00
11 Accum. Depreciation—Fac. Bldg. 60 0 0 0 00 (e) 15 0 0 0 00
12 Factory Machines 50 0 0 0 00
13 Accum. Depreciation—Fac. Machines 20 0 0 0 00 (e) 5 0 0 0 00
24 Sales Returns and Allowances 650000
25 Materials Purchases 275 0 0 0 00
26 Purchases Returns and Allowances 500000
27Freight In 900000
28 Direct Labor 145 0 0 0 00 (f) 1 8 0 0 00
DEBIT CREDITCREDIT
ADJUSTMENTS
DEBIT
ACCOUNT NAME
TRIAL BALANCE
PROBLEM 26.2B (continued)
40 0 0 0 00 40 0 0 0 00 1
80 0 0 0 00 80 0 0 0 00 2
25 0 0 0 00 25 0 0 0 00 13
20 0 0 0 00 20 0 0 0 00 14
10 0 0 0 00 10 0 0 0 00 15
78 0 0 0 00 78 0 0 0 00 16
200000 200000 17
146 8 0 0 00 146 8 0 0 00 28
25 2 0 0 00 25 2 0 0 00 29
18 1 5 3 00 18 1 5 3 00 30
24 0 0 0 00 24 0 0 0 00 31
978 0 5 3 00 1,371 0 1 5 00 498 1 5 3 00 5 0 0 0 00 650000 94650000 47340000 41951500 32
DEBIT CREDIT
BALANCE SHEET
DEBIT CREDIT DEBIT CREDIT DEBIT
ADJUSTED TRIAL BALANCE COST OF GOODS MANUFACTURED INCOME STATEMENT
CREDIT
PROBLEM 26.2B (continued)
Square Company
Worksheet (Continued)
Year Ended December 31, 2013
1 Totals Brought Forward 982 9 0 0 00 1,344 5 0 0 00 84 1 5 3 00 115 5 1 5 00
2Repairs and Maintenance—Factory 500000
9 Payroll Taxes Expense—Sales 950000
10 Delivery Expense 750000
11Advertising Expense 200000
12 Uncollectible Accounts Expense (b) 4 0 0 00
13 Miscellaneous Selling Expense 650000
DEBIT
ACCOUNT NAME
TRIAL BALANCE ADJUSTMENTS
CREDIT DEBIT CREDIT
PROBLEM 26.2B (continued)
978 0 5 3 00 1,371 0 1 5 00 498 1 5 3 00 5 0 0 0 00 650000 94650000 47340000 41951500 1
500000 500000 2
650000 650000 13
150 0 0 0 00 150 0 0 0 00 14
40 0 0 0 00 40 0 0 0 00 15
19 0 0 0 00 19 0 0 0 00 16
200000 200000 17
110000 110000 18
17 9 6 2 00 17 9 6 2 00 19
CREDIT DEBIT
ADJUSTED TRIAL BALANCE COST OF GOODS MANUFACTURED INCOME STATEMENT
CREDIT DEBIT CREDIT
BALANCE SHEET
DEBIT CREDIT DEBIT
PROBLEM 26.2B (continued)
Work in Process, January 1 38 0 0 0 00
Raw Materials
Less: Raw Materials, December 31 21 0 0 0 00
Raw Materials Used 278 0 0 0 00
Direct Labor 146 8 0 0 00
Manufacturing Overhead
Indirect Labor 25 2 0 0 00
Payroll Taxes—Factory 18 1 5 3 00
Utilities—Factory 24 0 0 0 00
Repairs and Maintenance—Factory 500000
Square Company
Statement of Cost of Goods Manufactured
Year Ended December 31, 2013
PROBLEM 26.2B (continued)
Revenue
Sales 94650000
Less Sales Returns and Allowances 650000
Net Sales 94000000
Cost of Goods Sold
Operating Expenses
Selling Expenses
Sales Salaries Expense 9500000
Payroll Taxes Expense—Sales Salaries 950000
Delivery Expense 750000
Year Ended December 31, 2013
Square Company
Income Statement
PROBLEM 26.2B (continued)
Balance, January 1, 2013 185 0 0 0 00
Add: Net Income for 2013 53 8 8 5 00
Square Company
Statement of Retained Earnings
Year Ended December 31, 2013
PROBLEM 26.2B (continued)
Current Assets
Cash 4000000
Accounts Receivable 8000000
Factory Supplies 100000
Total Current Assets 20100000
Property, Plant, and Equipment
Land 5000000
Factory Building 15000000
Less: Accumulated Depreciation—Factory Building 7500000 7500000
Income Tax Payable 196200
Social Security Tax Payable 1 2 4 00
Medicare Tax Payable 2 9 00
Total Liabilities 8211500
Stockholders’ Equity
December 31, 2013
Assets
Square Company
Balance Sheet
PROBLEM 26.2B (continued)
PAGE
POST.
REF.
1 1
12 31 Work in Process Inventory 36 0 0 0 00 12
13 Manufacturing Summary 36 0 0 0 00 13
14 14
15 31 Income Summary 26 0 0 0 00 15
16 Finished Goods Inventory 26 0 0 0 00 16
27 Prepaid Insurance 200000 27
28 28
29 (Adjustment d) 29
30 31 Indirect Materials and Supplies 300000 30
31 Factory Supplies 300000 31
Adjusting Entries
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 26.2B (continued)
POST.
REF.
1 2013 (Adjustment e) 1
2 Dec. 31 Depreciation—Factory Building 15 0 0 0 00 2
3 Depreciation—Factory Machines 5 0 0 0 00 3
4 Depreciation—Office Furniture and Equipment 200000 4
13 13
14 (Adjustment g) 14
15 31 Payroll Taxes—Factory 1 5 3 00 15
16 Social Security Tax Payable 1 2 4 00 16
17 Medicare Tax Payable 2 9 00 17
PAGEGENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 26.2B (continued)
POST.
REF.
1 1
2 2013 2
3 Dec. 31 Purchases Returns and Allowances 5 0 0 0 00 3
10 Indirect Labor 25200 00 10
11 Payroll Taxes—Factory 18153 00 11
12 Utilities—Factory 24 0 0 0 00 12
13 Repairs and Maintenance—Factory 5000 00 13
14 Indirect Materials and Supplies 7000 00 14
15 Depreciation—Factory Building 15 0 0 0 00 15
16 Depreciation—Factory Machines 500000 16
27 Delivery Expense 750000 27
28 Advertising Expense 200000 28
29 Uncollectible Accounts Expense 4 0 0 00 29
30 Miscellaneous Selling Expense 650000 30
31 Officers’ Salaries Expense 15000000 31
PAGE
Closing Entries
GENERAL JOURNAL
DATE DESCRIPTION DEBIT CREDIT
PROBLEM 26.2B (continued)
POST.
REF.
1 2013 1
2 Dec. 31 Income Summary 53 8 8 5 00 2
9 9
10 1 Social Security Tax Payable 1 2 4 00 10
11 Medicare Tax Payable 2 9 00 11
12 Payroll Taxes—Factory 1 5 3 00 12
13 13
CREDIT
Square Company spends 27.5% of cost of goods manufactured on direct labor, 3.5%
less than the industry standard.
PAGEGENERAL JOURNAL
DATE DESCRIPTION DEBIT
CRITICAL THINKING PROBLEM 26
CRITICAL
THINKING
PROBLEM
2
Sue Products
Sue
Products
Statement of Cost of Goods Manufactured
S
tatement o
f
C
ost o
f
G
oo
d
s
M
anu
f
acture
d
Year Ended December 31 2013
Year
Ended
December
31
,
2013
W k i P J 1 (2)
19
9
5
0
00
Work in Process, January 1 (2) 1995000
,y()
M
Direct
Raw
20
0
0
0
00
T
A
200
0
0
0
00
Less
22
0
0
0
00
Direct
178
0
0
0
00
Direct
120
0
0
0
00
M
144
0
0
0
00
T
i
442
0
0
0
00
461
9
5
0
00
Work
21
0
0
0
00
S
P
Income
Year
Ended
December
31,
2013
Net
750
0
0
0
00
Cost
42
0
0
0
00
Cost
440
9
5
0
00
Finished
482
9
5
0
00
Less
40
0
0
0
00
G
307
0
5
0
00
Operating
157
0
5
0
00
Net
150
0
0
0
00
1
Beginning
1
×
$40
000
$42
000
3
M
1
$120
$144
4
Operating
=
Gross
CRITICAL THINKING PROBLEM 26.2
Work in Process, January 1 í0í
Raw Materials
Raw Materials, January 1 í0í
Raw Materials Used 6850000
Direct Labor 4500000
Manufacturing Overhead
Payroll Taxes 450000
Factory Supplies 200000
Utilities 220000
Statement of Cost of Goods Manufactured
Year Ended December 31, 2013
NeckWarmers
SOLUTIONS TO BUSINESS CONNECTIONS
Managerial Focus:
2. Estimates made based on experience, inventory sheets, work in process, and wage summaries.
4. The overall business profit should be examined, not just the cost of goods manufactured statement.
Ethical Dilemma:
Internet Connection:
The four parts of the exam are Business Analysis, Management Accounting and Reports, Strategic Management, and
Business Applications.
Part A True-False
1. FALSE
3. FALSE
5. FALSE
7. TRUE
9. TRUE
Part B Completion
1. manufacturing costs
3. direct materials
5. work in process
7. credit; debit
SOLUTIONS TO PRACTICE TEST