Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
887
Exercise 15-19 (15 minutes)
(1)
Services in Process Inventory* …………………………..
9,900
Service Salaries Payable ………………………………….
9,900
(2)
Cost of Services Provided ……………………………………..
14,850
Services in Process Inventory ………………………….
14,850
Record cost of services.
Exercise 15-20 (10 minutes)
Raw Materials Inventory ………………………………………..
3,108
Accounts Payable …………………………………………….
3,108
Work in Process Inventory* ……………………………………
3,106
Raw Materials Inventory …………………………………..
3,106
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
888
PROBLEM SET A
Problem 15-1A (80 minutes)
Part 1 Total manufacturing costs and the costs assigned to each job
306
307
308
From March
Direct materials ………………….
$ 29,000
$ 35,000
Direct labor ………………………..
20,000
18,000
Applied overhead* ……………..
Direct materials ………………….
Direct labor ……………………….
85,000
Applied overhead* ……………..
Part 2 Journal entries for April
a.
Raw Materials Inventory …………………………………………
500,000
Accounts Payable …………………………………………….
500,000
Record materials purchases.
455,000
Raw Materials Inventory ……………………………………
455,000
Assign direct materials to jobs.
Work in Process Inventory ……………………………………..
Cash …………………………………………………………………
Record direct labor.
Cash …………………………………………………………………
Record indirect labor.
Factory Overhead ……………………………………………..
170,000
Apply overhead to jobs.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
889
Problem 15-1A (continued)
f.
[continued from prior page]
Factory Overhead …………………………………………………..
Raw Materials Inventory ……………………………………
Record indirect materials.
50,000
50,000
Cash …………………………………………………………………
Record factory utilities.
Accumulated Depreciation—Factory Equip ……….
Record other factory overhead.
Factory Overhead …………………………………………………..
Cash …………………………………………………………………
Record factory rent.
g.
Finished Goods Inventory (306 & 307) ……………………..
828,500
Work in Process Inventory …………………………..
828,500
Record jobs completed ($321,500 + $507,000).
h.
Cost of Goods Sold (306) ………………………………………..
Finished Goods Inventory …………………………..
321,500
Record cost of sale of job.
i.
Sales ………………………………………………………………..
635,000
Record sale of job.
j.
Cost of Goods Sold ………………………………………………..
5,000
Factory Overhead* ……………………………………………
5,000
Assign underapplied overhead.
*Overhead applied to jobs …..
Overhead incurred
Indirect materials……………………
Indirect labor …………………………
Factory rent …………………………..
Factory utilities ………………………
Factory equip. depreciation. …..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
890
Problem 15–1A (Continued)
Part 3
MARCELINO COMPANY
Schedule of Cost of Goods Manufactured
For Month Ended April 30
Direct materials used ……………………………………………………….
$ 455,000
Direct labor used ……………………………………………………………….
340,000
Factory overhead applied …………………………………………………..
170,000
Total manufacturing costs …………………………………………………
Add work in process March 31 (Jobs 306 & 307) …………………
Total cost of work in process ……………………………………………..
Deduct work in process, April 30 (Job 308) …………………………
Cost of goods manufactured …………………………..…………………
Part 4
Gross profit on the income statement for the month ended April 30
Sales …………………………………………………………………………………………….
$ 635,000
Cost of goods sold ($321,500 + $5,000) …………………………………………..
(326,500)
Gross profit …………………………………………………………………………………..
$ 308,500
Presentation of inventories on the April 30 balance sheet
Inventories
Raw materials ………………………………………………………………………………
$ 75,000*
Work in process (Job 308) ……………………………………………………………..
Finished goods (Job 307) ………………………………………………………………
Part 5
No, this adjustment is not posted to individual job cost sheets. Overhead is
underapplied by $5,000, meaning that individual jobs or batches of jobs are
under-costed. Thus, profits at the job (and batch) level are overstated.
891
Problem 15-2A (75 minutes)
Part 1
a.
Dec. 31
Work in Process Inventory ……………………………………..
28,800
Raw Materials Inventory …………………………..
28,800
Record direct materials costs for
Jobs 402 and 404 ($10,200 + 18,600).
b.
Dec. 31
Work in Process Inventory ……………………………………..
59,800
Factory Wages Payable …………………………..
59,800
c.
Dec. 31
Work in Process Inventory ……………………………………..
119,600
Factory Overhead ……………………………………………..
Allocate overhead to Jobs 402 and 404
at 200% of direct labor cost assigned.
d.
Dec. 31
Factory Overhead …………………………………………………..
5,600
Raw Materials Inventory …………………………..
5,600
Add cost of indirect materials
to actual factory overhead.
e.
Dec. 31
Factory Overhead …………………………………………………..
8,200
Factory Wages Payable …………………………..
8,200
Accrue indirect labor and assign it to
actual factory overhead.
Part 2
Revised Factory Overhead account
Dec. 31
Cost of Goods Sold ………………………………………………..
9,200
Factory Overhead ……………………………………………..
9,200
Close underapplied overhead.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
892
Problem 15-2A (continued)
Part 3
BERGAMO BAY COMPANY
Trial Balance
December 31, 2019
Debit
Credit
Cash ………………………………………………………………………..
$170,000
Accounts receivable ………………………………………………….
75,000
Raw materials inventory* …………………………………………..
45,600
15,000
Prepaid rent ……………………………………………………………..
Accounts payable …………………………………………………….
Common stock ……………………………………………………….
50,000
Retained earnings …………………………………………………….
271,000
Sales ………………………………………………………………………..
373,000
* Raw materials inventory
Balance per trial balance ……………………………………………………….
$80,000
Less: Amounts recorded for Jobs 402 and 404 ………………………….
(28,800)
Less: Indirect materials ……………………………………………………….
(5,600)
Ending balance ………………………………………………………………………..
$45,600
** Work in process inventory
Job 402
Job 404
Total
Direct materials ……………..
$ 10,200
$18,600
$ 28,800
Direct labor ……………………
Overhead ………………………
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
893
Problem 15-2A (continued)
Part 4
BERGAMO BAY COMPANY
Income Statement
For Year Ended December 31, 2019
Sales ……………………………………………………………………………………
$373,000
Gross profit ………………………………………………………………………….
BERGAMO BAY COMPANY
Balance Sheet
December 31, 2019
Assets
Cash …………………………………………………………………………..
$170,000
Accounts receivable ……………………………………………………
75,000
Inventories
Raw materials inventory ……………………………………………..
Work in process inventory ………………………………………….
Finished goods inventory …………………………………………..
Total assets ……………………………………………………….
Liabilities and equity
Accounts payable ……………………………………………………….
$ 17,000
Common stock ……………………………………………………….
50,000
Retained earnings ($271,000 + $85,800) ………………………….
Total liabilities and equity ……………………………………………
Factory wages payable ………………………………………………..
68,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
894
Problem 15-2A (concluded)
Part 5
This $5,600 error would cause the costs for Job 404 to be understated.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
895
Problem 15-3A (70 minutes)
Part 1
JOB COST SHEETS
Job No. 136
Job No. 138
Materials …………..
$ 48,000
Materials …………..
$ 19,200
Labor ……………….
12,000
Labor ……………….
37,500
Overhead ………….
Overhead ………….
Job No. 137
Job No. 139
Materials …………..
$ 32,000
Materials …………..
$ 22,400
Labor ……………….
10,500
Labor ……………….
39,000
Overhead ………….
Overhead ………….
Job No. 140
Materials …………..
Labor ……………….
Overhead ………….
Part 2
a.
Raw Materials Inventory …………………………………………
200,000
Accounts Payable …………………………………………….
200,000
Record materials purchases.
b.
128,000
Raw Materials Inventory ……………………………………
147,500
Record direct & indirect materials.
Cash …………………………………………………………………
Record other factory overhead.
896
Problem 15-3A (Continued)
[continued from prior page]
d.
Work in Process Inventory ……………………………………..
102,000
Factory Overhead …………………………………………………..
24,000
Cash …………………………………………………………………
126,000
Record direct & indirect labor.
e.
Work in Process Inventory ……………………………………..
177,000
Factory Overhead ……………………………………………..
177,000
f.
Finished Goods Inventory ………………………………………
355,100
Work in Process Inventory …………………………..
355,100
($84,000 + $131,700 + $139,400).
g.
Accounts Receivable ……………………………………………..
525,000
Sales ………………………………………………………………..
525,000
Record sales on account.
Cost of Goods Sold ………………………………………………..
215,700
Finished Goods Inventory …………………………..
215,700
Record cost of sales ($84,000 + $131,700).
h.
Factory Overhead …………………………………………………..
149,500
Accum. Depreciation—Factory Building ……………
Accum. Depreciation—Factory Equipment ………..
Prepaid Insurance …………………………………………….
Property Taxes Payable …………………………………….
Record other factory overhead.
i.
Work in Process Inventory ……………………………………..
27,000
Factory Overhead ……………………………………………..
[($10,500 + $3,000) x 200%].
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
897
Problem 15–3A (Continued)
Part 3
GENERAL LEDGER ACCOUNTS
Raw Materials Inventory
(a)
200,000
(b)
147,500
Bal.
52,500
128,000
(f)
(e)
102,000
(i)
Part 4
Reports of Job Costs*
Work in Process Inventory
Job 137 ………………………………….
$ 63,500
Job 140 ………………………………….
15,400
Balance ………………………………….
$ 78,900
Job 139 ………………………………….
$139,400
Job 136 ………………………………….
$ 84,000
Job 138 ………………………………….
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
898
Problem 15-4A (35 minutes)
Part 1
a. Predetermined overhead rate
b. Overhead costs charged to jobs
Direct
Applied
Job No.
Labor
Overhead (60%)
201 ……………………………………………………………….
$ 604,000
$ 362,400
202 ……………………………………………………………….
203 ……………………………………………………………….
204 ……………………………………………………………….
205 ……………………………………………………………….
206 ……………………………………………………………….
c. Overapplied or underapplied overhead determination
Actual overhead cost…………………………………….
Less applied overhead cost …………………………..
Underapplied overhead …………………………..
$ 12,800
Part 2
Dec. 31
Cost of Goods Sold …………………………..……………………
12,800
Factory Overhead …………………………..………………….
12,800
Assign underapplied overhead.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
Problem 15-5A (80 minutes)
JOB COST SHEET
Customer’s Name
Worldwide Company
Job No.
102
Direct Materials
Direct Labor
Overhead Costs Applied
Date
Requisition
Number
Amount
Time
Ticket
Number
Amount
Date
Rate
Amount
#35
33,750
#1–10
90,000
May —
80%
72,000
#36
12,960
46,710
90,000
JOB COST SHEET
Customer’s Name
Reuben Company
Job No.
103
Direct Materials
Direct Labor
Overhead Costs Applied
Date
Requisition
Number
Amount
Time
Ticket
Number
Amount
Date
Rate
Amount
#37
17,500
#11–30
65,000
May —
80%
52,000
#38
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
900
Problem 15-5A (Continued)
MATERIALS LEDGER CARD
Item
Material M
Received
Issued
Balance
Date
Receiving
Report
Units
Unit
Price
Total
Price
Requi–
sition
Units
Unit
Price
Total
Price
Units
Unit
Price
Total
Price
MATERIALS LEDGER CARD
Item
Material R
Received
Issued
Balance
Date
Receiving
Report
Units
Unit
Price
Total
Price
Requi–
sition
Units
Unit
Price
Total
Price
Units
Unit
Price
Total
Price
MATERIALS LEDGER CARD
Item
Paint
Received
Issued
Balance
Date
Report
Units
Price
Price
sition
Units
Price
Price
Units
Price
Price
Receiving
Unit
Total
Requi–
Unit
Total
Unit
Total
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
901
Problem 15–5A (Continued)
GENERAL JOURNAL
a.
Raw Materials Inventory ………………………………………..
78,700
Accounts Payable …………………………………………….
78,700
Record materials purchases ($62,500+$16,200).
d.
Work in Process Inventory* ……………………………………
155,000
Factory Overhead ………………………………………………….
19,250
Cash ………………………………………………………………..
174,250
*($90,000 + 65,000)
Factory Overhead ………………………………………………….
102,000
Cash ………………………………………………………………..
102,000
Record other factory overhead.
e.
Finished Goods Inventory ……………………………………..
208,710
Work in Process ………………………………………………
208,710
Record completion of jobs.
f.
Accounts Receivable …………………………………………….
400,000
Sales ……………………………………………………………….
400,000
Record sales on account.
208,710
Finished Goods Inventory ………………………………..
208,710
Record cost of sales.
Work in Process Inventory* ……………………………………
71,050
Factory Overhead ………………………………………………….
Raw Materials Inventory …………………………………..
72,175
*($33,750 + $12,960 + $17,500 + $6,840)
i.
Work in Process Inventory …………………………………….
124,000
Factory Overhead …………………………………………….
124,000
Apply overhead ($72,000 + 52,000).
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
902
Problem 15–5A (Continued)
j. The ending balance in the Factory Overhead account is computed as:
Actual Factory Overhead
Miscellaneous overhead …………………….
$102,000
Indirect materials ……………………………….
Indirect labor ……………………………………..
Total actual factory overhead ……………..
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
903
PROBLEM SET B
Problem 15-1B (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
Direct materials …………………………..
Direct labor …………………………..
30,000
68,000
Applied overhead* ………………………
15,000
34,000
Part 2 Journal entries for September
a.
Raw Materials Inventory …………………………………………
400,000
Accounts Payable …………………………………………….
400,000
Record materials purchases.
350,000
Raw Materials Inventory ……………………………………
350,000
Cash ………………………………………………………………..
Record and pay direct labor.
Cash ………………………………………………………………..
Record and pay indirect labor.
e.
109,000
Factory Overhead ……………………………………………..
109,000
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
904
Problem 15–1B (Continued)
f. [continued from prior page]
Factory Overhead …………………………………………………..
20,000
Cash ………………………………………………………………..
20,000
Record other factory overhead (rent).
Factory Overhead …………………………………………………..
12,000
Cash ………………………………………………………………..
12,000
Record other factory overhead (utilities).
Factory Overhead …………………………………………………..
30,000
Accum. Depreciation—Factory Equip ………………..
30,000
Factory Overhead …………………………………………………..
30,000
Raw Materials Inventory ……………………………………
30,000
Record indirect materials.
g.
Finished Goods Inventory ………………………………………
500,000
Work in Process Inventory …………………………..
500,000
Record jobs completed ($186,000 + $314,000).
h.
Cost of Goods Sold ………………………………………………..
186,000
Finished Goods Inventory …………………………..
186,000
Record cost of sale of job.
i.
380,000
Sales ………………………………………………………………..
380,000
Record sale of job.
j.
Factory Overhead* …………………………………………………
Cost of Goods Sold ……………………………………………
Assign overapplied overhead.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
905
Problem 15–1B (Continued)
Part 3
PEREZ MFG.
Schedule of Cost of Goods Manufactured
For Month Ended September 30
Direct materials used …………………………………………………
$350,000
Direct labor used……………………………………………………….
218,000
Total manufacturing costs ………………………………………….
Add work in process August 31 (Jobs 114 & 115) ………….
Total cost of work in process ……………………………………..
Deduct work in process, September 30 (Job 116) …………
Part 4
Gross profit on the income statement for the month ended September 30
$380,000
Cost of goods sold ($186,000 – $3,000) ……………………………………….
(183,000)
Inventories
Raw materials ………………………………………………………………………….
$170,000*
Work in process (Job 116) ……………………………………………………….
Finished goods (Job 115) ……………………………………………………….
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.
Wild and Shaw, Financial & Managerial Accounting, 8e Solutions Manual: Chapter 15
906
Problem 15-2B (75 minutes)
Part 1
a.
Dec. 31
Work in Process Inventory …………………………..
12,200
Raw Materials Inventory …………………………..
12,200
Record direct materials costs for
Jobs 603 and 604 ($4,600 + $7,600).
b.
Dec. 31
Work in Process Inventory …………………………..
13,000
Factory Wages Payable …………………………..
13,000
c.
Dec. 31
Work in Process Inventory …………………………..
26,000
Factory Overhead ……………………………………………..
26,000
Allocate overhead to Jobs 603 and 604 at
d.
Dec. 31
Factory Overhead …………………………………………………..
2,100
Raw Materials Inventory …………………………..
2,100
e.
Dec. 31
Factory Overhead …………………………………………………..
3,000
Factory Wages Payable …………………………..
3,000
Accrue cost of indirect labor.
Record cost of indirect materials.