Problem 19-5A (Continued)
GENERAL JOURNAL
a.
Raw Materials Inventory ………………………………………..
78,700
Accounts Payable ………………………………………..…..
78,700
To record materials purchases ($62,500+$16,200).
d.
Factory Payroll ………………………………………………….…..
174,250
Cash ………………………………………………………………..
174,250
To record factory payroll.
Factory Overhead ……………………………………………..…..
102,000
Cash ………………………………………………………………..
102,000
To record other factory overhead.
e.
Finished Goods Inventory ……………………………………..
208,710
Goods in Process ………………………………………..…..
208,710
To record completion of jobs.
f.
Accounts Receivable ………………………………………..…..
400,000
Sales …………………………………………………………..…..
400,000
To record sales on account.
Cost of Goods Sold …………………………………………..…..
208,710
Finished Goods Inventory ………………………………..
208,710
To record cost of sales.
h.
Goods in Process Inventory* …………………………….…..
71,050
Factory Overhead ……………………………………………..…..
1,125
Raw Materials Inventory …………………………………..
72,175
To record direct & indirect materials.
*($33,750 + $12,960 + $17,500 + $6,840)
i.
Goods in Process Inventory* …………………………….…..
155,000
Factory Overhead ……………………………………………..…..
19,250
Factory Payroll …………………………………………….…..
174,250
To record direct & indirect labor.
*($90,000 + 65,000)
j.
Goods in Process Inventory …………………………………..
124,000
Factory Overhead ………………………………………..…..
124,000
To apply overhead ($72,000 + 52,000).
1108 Fundamental Accounting Principles, 21st Edition
Problem 19-5A (Continued)
k. The ending balance in the Factory Overhead account is computed as:
Actual Factory Overhead
Miscellaneous overhead …………………….
$102,000
Indirect materials ……………………………….
1,125
Indirect labor ………………………………….….
19,250
Total actual factory overhead ………….….
122,375
Factory overhead applied ………………….….
124,000
Overapplied overhead ……………………….….
$ (1,625)
PROBLEM SET B
Problem 19-1B (80 minutes)
Part 1
Total manufacturing costs and the costs assigned to each job
114
115
116
Sept. Total
From August
Direct materials …………………..………
$ 14,000
$ 18,000
Direct labor …………………………..
18,000
16,000
Applied overhead* ………………………
9,000
8,000
Beginning goods
In process ………………………..…
41,000
42,000
$ 83,000
For September
Direct materials …………………..………
100,000
170,000
$ 80,000
350,000
Direct labor ………………………..…
30,000
68,000
120,000
218,000
Applied overhead* ………………………
15,000
34,000
60,000
109,000
Total costs added in
September ……………………….….
145,000
272,000
260,000
677,000
Total costs …………………………..
$186,000
$314,000
$260,000
$760,000
*Equals 50% of direct labor cost.
Part 2 Journal entries for September
a.
Raw Materials Inventory ………………………………….……..
400,000
Accounts Payable ……………………………………..……..
400,000
To record materials purchases.
Factory Payroll ……………………………………………….……..
232,000
Cash ………………………………………………………………..
232,000
To record factory payroll.
Factory Overhead …………………………………………………..
30,000
Raw Materials Inventory …………………………….……..
30,000
To record indirect materials.
Factory Overhead …………………………………………………..
14,000
Factory Payroll ………………………………………….……..
14,000
To record indirect labor.
Factory Overhead …………………………………………………..
20,000
Cash ………………………………………………………………..
20,000
To record other factory overhead (rent).
Problem 19-1B (Continued)
a. [continued from prior page]
Factory Overhead …………………………………………………..
12,000
Cash ………………………………………………………………..
12,000
To record other factory overhead (utilities).
Factory Overhead …………………………………………………..
30,000
Accum. Depreciation—Factory Equip ………………..
30,000
To record other factory overhead (depreciation).
b.
Goods in Process Inventory …………………………………..
350,000
Raw Materials Inventory …………………………….……..
350,000
To assign direct materials to jobs.
Goods in Process Inventory …………………………………..
218,000
Factory Payroll ………………………………………….……..
218,000
To assign direct labor to jobs.
Goods in Process Inventory …………………………………..
109,000
Factory Overhead ……………………………………………..
109,000
To apply overhead to jobs.
c.
Finished Goods Inventory ……………………………….……..
500,000
Goods in Process Inventory …………………………..
500,000
To record jobs completed ($186,000 + $314,000).
d.
Cost of Goods Sold ………………………………………………..
186,000
Finished Goods Inventory …………………………..
186,000
To record cost of sale of job.
e.
Cash ……………………………………………………………………..
380,000
Sales …………………………..…………………………….……..
380,000
To record sale of job.
f.
Factory Overhead* ………………………………………….……..
3,000
Cost of Goods Sold …………………………………….……..
3,000
To assign overapplied overhead.
Problem 19-1B (Continued)
Part 3
TAVELLA COMPANY
Manufacturing Statement
For Month Ended September 30
Direct materials used ………………………………………………...
$350,000
Direct labor used……………………………………………………….
218,000
Factory overhead
Indirect materials …………………………………………………....
$ 30,000
Indirect labor …………………………………………………………..
14,000
Factory rent …………………………………………………………....
20,000
Factory utilities ……………………………………………………....
12,000
Depreciation of equipment ……………………………………...
30,000
106,000
Total manufacturing costs ………………………………………....
674,000
Add goods in process August 31 (Jobs 114 & 115) ……....
83,000
Total cost of goods in process …………………………………...
757,000
Deduct goods in process, September 30 (Job 116) ……...
(260,000)
Add overapplied overhead* ………………………………………..
3,000
Cost of goods manufactured ……………………………………...
$500,000
*Alternatively, overapplied overhead can be listed among the overhead items.
Part 4
Gross profit on the income statement for the month ended September 30
Sales …………………………………………………………………………………………
$380,000
Cost of goods sold ($186,000 – $3,000) …………………………………….…
(183,000)
Gross profit …………………………………………………………………………….…
$197,000
Presentation of inventories on the September 30 balance sheet
Inventories
Raw materials ……………………………………………………………………….…
$170,000*
Goods in process (Job 116) ………………………………………………………
260,000
Finished goods (Job 115) ……………………………………………………….
314,000
Total inventories ………………………………………………………………………
$744,000
* Beginning raw materials inventory …………………………..
$150,000
Purchases ……………………………………………………….
400,000
Direct materials used ……………………………………………………….
(350,000)
Indirect materials used…………………………….…………………………
(30,000)
Ending raw materials inventory ………………..…………
$170,000
1112 Fundamental Accounting Principles, 21st Edition
Problem 19-1B (Concluded)
Part 5
Overhead is overapplied by $3,000, meaning that individual jobs or batches
are over-costed. Thus, profits at the job (and batch) level are understated.
Problem 19-2B (75 minutes)
Part 1
a.
Dec. 31
Goods in Process Inventory ……………………….….
12,200
Raw Materials Inventory ………………………..…
12,200
To record direct materials costs for
Jobs 603 and 604 ($4,600 + $7,600).
b.
Dec. 31
Goods in Process Inventory ……………………….….
13,000
Factory Payroll ……………………………………..………….
13,000
To record direct labor costs for
Jobs 603 and 604 ($5,000 + $8,000).
c.
Dec. 31
Goods in Process Inventory ……………………….….
26,000
Factory Overhead ………………………………….………….
26,000
To allocate overhead to Jobs 603 and 604 at
200% of direct labor cost assigned to them.
d.
Dec. 31
Factory Overhead ……………………………………….………….
2,100
Raw Materials Inventory ………………………..…
2,100
To add cost of indirect materials
to actual factory overhead.
e.
Dec. 31
Factory Overhead ……………………………………….………….
3,000
Factory Payroll ……………………………………..………….
3,000
To add cost of indirect labor to
actual factory overhead.
Problem 19-2B (Continued)
Part 2
Revised Factory Overhead account
Ending balance from trial balance ……………………………….….
$27,000
Debit
Applied to Jobs 603 and 604 ……………………………………….….
(26,000)
Credit
Additional indirect materials ……………………………………….….
2,100
Debit
Additional indirect labor ……………………………………………..….
3,000
Debit
Underapplied overhead ……………………………………………….….
$ 6,100
Debit
Dec. 31
Cost of Goods Sold …………………………………….………….
6,100
Factory Overhead ………………………………….………….
6,100
To remove $6,100 of underapplied overhead from
the Factory Overhead account and add it to cost
of goods sold.
Part 3
SWISHER COMPANY
Trial Balance
December 31, 2013
Debit
Credit
Cash …………………………………………………………………....
$ 48,000
Accounts receivable ……………………………………………...
42,000
Raw materials inventory* ……………………………………....
11,700
Goods in process inventory** ……………………………....
51,200
Finished goods inventory ……………………………………..
9,000
Prepaid rent ………………………………………………………....
3,000
Accounts payable ………………………………………………...
$ 10,500
Notes payable ……………………………………………………....
13,500
Common stock ……………………………………………………..
30,000
Retained earnings ………………………………………………...
87,000
Sales …………………………………………………………………....
180,000
Cost of goods sold*** …………………………………………...
111,100
Factory payroll ……………………………………………………...
0
Factory overhead …………………………………………………..
0
Operating expenses……………………………………………....
45,000
_______
Totals …………………………………………………………………...
$321,000
$321,000
1114 Fundamental Accounting Principles, 21st Edition
Problem 19-2B (Continued)
Part 3 (Concluded)
* Raw materials inventory
Balance per trial balance …………………………………………..…………..
$26,000
Less: Amounts recorded for Jobs 603 and 604 ………….………………
(12,200)
Less: Indirect materials ……………………………………………………….
(2,100)
Ending balance ………………………………………………………..………………
$11,700
** Goods in process inventory
Job 603
Job 604
Total
Direct materials ……………..
$ 4,600
$ 7,600
$12,200
Direct labor ……………….…..
5,000
8,000
13,000
Overhead ………………….…..
10,000
16,000
26,000
Total cost ………………….…..
$19,600
$31,600
$51,200
*** $105,000 + $6,100 = $111,100
Part 4
SWISHER COMPANY
Income Statement
For Year Ended December 31, 2013
Sales ……………………………………………………………………..……
$ 180,000
Cost of goods sold ………………………………………………………
(111,100)
Gross profit …………………………………………………………………
68,900
Operating expenses ……………………………………………….……
(45,000)
Net income …………………………………………………………….……
$ 23,900
Problem 19-2B (Concluded)
Part 4 (Concluded)
SWISHER COMPANY
Balance Sheet
December 31, 2013
Assets
Cash ……………………………………………………….
$ 48,000
Accounts receivable ………………………………..……
42,000
Inventories
Raw materials inventory …………………………..
$11,700
Goods in process inventory…………………….……
51,200
Finished goods inventory ……………………….….
9,000
71,900
Prepaid rent …………………………………………….……
3,000
Total assets …………………………………………….……
$164,900
Liabilities and equity
Accounts payable …………………………………………
$ 10,500
Notes payable ………………………………………….……
13,500
Total liabilities ………………………………………………
24,000
Common stock ………………………………………..……
30,000
Retained earnings ($87,000 + $23,900) ………….……
110,900
Total stockholders’ equity ………………………..…
140,900
Total liabilities and equity ………………………..…
$164,900
Part 5
The $2,100 error would cause the costs for Job 604 to be understated.
Since Job 604 is in process at the end of the period, goods in process
inventory and total assets would both be understated on the balance sheet.
1116 Fundamental Accounting Principles, 21st Edition
Problem 19-3B (70 minutes)
Part 1
JOB COST SHEETS
Job No. 487
Materials ……..…………….
$30,000
Labor ………….…………….
8,000
Overhead …….…………….
16,000
Total cost ………………….
$54,000
Job No. 488
Materials ……..…………….
$20,000
Labor ………….…………….
7,000
Overhead …….…………….
14,000
Total cost ………………….
$41,000
Job No. 489
Materials ……..…………….
$12,000
Labor ………….…………….
25,000
Overhead …….…………….
50,000
Total cost ………………….
$87,000
Job No. 490
Materials ……..…………….
$14,000
Labor ………….…………….
26,000
Overhead …….…………….
52,000
Total cost ………………….
$92,000
Job No. 491
Materials ……..…………….
$ 4,000
Labor ………….…………….
2,000
Overhead …….…………….
4,000
Total cost ………………….
$10,000
Problem 19-3B (Concluded)
Part 2
a.
Raw Materials Inventory ………………………………….……..
125,000
Accounts Payable ……………………………………..……..
125,000
To record materials purchases.
b.
Factory Payroll ……………………………………………….……..
84,000
Cash ………………………………………………………………..
84,000
To record factory payroll.
c.
Factory Overhead …………………………………………………..
11,000
Cash ………………………………………………………………..
11,000
To record other factory overhead.
d.
Goods in Process Inventory …………………………………..
80,000
Factory Overhead …………………………………………………..
12,000
Raw Materials Inventory …………………………….……..
92,000
To record direct & indirect materials.
e.
Goods in Process Inventory …………………………………..
68,000
Factory Overhead …………………………………………………..
16,000
Factory Payroll ………………………………………….……..
84,000
To record direct & indirect labor.
1118 Fundamental Accounting Principles, 21st Edition
Problem 19-3B (Continued)
[continued from prior page]
f.
Goods in Process Inventory …………………………………..
118,000
Factory Overhead ……………………………………………..
118,000
To apply overhead to jobs
[($8,000 + $25,000 + $26,000) x 200%].
g.
Finished Goods Inventory ……………………………….……..
233,000
Goods in Process Inventory …………………………..
233,000
To record completion of jobs
($54,000 + $87,000 + $92,000).
h.
Accounts Receivable ……………………………………………..
340,000
Sales …………………………..…………………………….……..
340,000
To record sales on account.
Cost of Goods Sold ………………………………………………..
141,000
Finished Goods Inventory …………………………..
141,000
To record cost of sales ($54,000 + $87,000).
i.
Factory Overhead …………………………………………………..
96,000
Accum. Depreciation—Factory Building …….……..
37,000
Accum. Depreciation—Factory Equipment ………..
21,000
Prepaid Insurance ……………………………………..……..
7,000
Property Taxes Payable …………………………….……..
31,000
To record other factory overhead.
j.
Goods in Process Inventory …………………………………..
18,000
Factory Overhead ……………………………………………..
18,000
To apply overhead to jobs
[($7,000 + $2,000) x 200%].
Problem 19-3B (Continued)
Part 3
GENERAL LEDGER ACCOUNTS
Raw Materials Inventory
Factory Payroll
(a)
125,000
(d)
92,000
(b)
84,000
(e)
84,000
Bal.
33,000
Bal.
0
Goods in Process Inventory
Factory Overhead
(d)
80,000
(g)
233,000
(c)
11,000
(f)
118,000
(e)
68,000
(d)
12,000
(j)
18,000
(f)
118,000
(e)
16,000
(j)
18,000
(i)
96,000
Bal.
51,000
Bal.
1,000
Finished Goods Inventory
Cost of Goods Sold
(g)
233,000
(h)
141,000
(h)
141,000
Bal.
92,000
Bal.
141,000
Part 4
Reports of Job Costs*
Goods in Process Inventory
Job 488 …………………………….…….
$ 41,000
Job 491 …………………………….…….
10,000
Balance …………………………….…….
$ 51,000
Finished Goods Inventory
Job 490 …………………………….…….
$ 92,000
Balance …………………………….…….
$ 92,000
Cost of Goods Sold
Job 487 …………………………….…….
$ 54,000
Job 489 …………………………….…….
87,000
Balance …………………………….…….
$141,000
*Individual totals reconcile with account balances shown in part 3.