1. Fortune, Ltd. produces reproductions of antique residential moldings a plant located in Indang Cavite. August 1, the start of the company's fiscal year, inventory account balances were as follows: Raw materials Work in process Finished goods P10,000 4,000 8,000 During the year, the following transactions were completed: Raw materials purchased on account, P160,000. • Raw materials requisitioned for use in production, P140,000 (materials costing P120,000 were chargeable directly to jobs, the remaining materials were indirect). Costs for employee services were incurred as follows: Direct labor Indirect labor P90,000 60,000 20,000 50,000 Sales commissions Administrative salaries • Prepaid insurance expired during the year, P18,000 (13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities). • Utity costs incurred in the factory, P10,000. • Advertising costs incurred, P15,000 Depreciation recorded on equipment, P25,000. (P20,000 of this amount was on equipment used in factory operations, the remaining was on equipment used in selling and administrative activities). Manufacturing overhead to production is 120% of direct labor. • Goods that had cost P310,000 to manufacture were transferred into the finished goods warehouse. Sales to customers during the year totaled P498,000. These goods had cost P308,000 to manufacture Required: • Prepare journal entries to record the transactions for the year. + Compute the ending balances of the Work in process and Finished goods account. + How much is the under/overapplied manufacturing overhead? • Prepare a statement of cost of goods sold for the year.
1. Fortune, Ltd. produces reproductions of antique residential moldings a plant located in Indang Cavite. August 1, the start of the company's fiscal year, inventory account balances were as follows: Raw materials Work in process Finished goods P10,000 4,000 8,000 During the year, the following transactions were completed: Raw materials purchased on account, P160,000. • Raw materials requisitioned for use in production, P140,000 (materials costing P120,000 were chargeable directly to jobs, the remaining materials were indirect). Costs for employee services were incurred as follows: Direct labor Indirect labor P90,000 60,000 20,000 50,000 Sales commissions Administrative salaries • Prepaid insurance expired during the year, P18,000 (13,000 of this amount related to factory operations, and the remainder related to selling and administrative activities). • Utity costs incurred in the factory, P10,000. • Advertising costs incurred, P15,000 Depreciation recorded on equipment, P25,000. (P20,000 of this amount was on equipment used in factory operations, the remaining was on equipment used in selling and administrative activities). Manufacturing overhead to production is 120% of direct labor. • Goods that had cost P310,000 to manufacture were transferred into the finished goods warehouse. Sales to customers during the year totaled P498,000. These goods had cost P308,000 to manufacture Required: • Prepare journal entries to record the transactions for the year. + Compute the ending balances of the Work in process and Finished goods account. + How much is the under/overapplied manufacturing overhead? • Prepare a statement of cost of goods sold for the year.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:1. Fortune, Ltd. produces reproductions of antique residential moldings a plant located in Indang Cavite.
August 1, the start of the company's fiscal year, inventory account balances were as follows:
Raw materials
Work in process
Finished goods
P10,000
4,000
8,000
During the year, the following transactions were completed:
Raw materials purchased on account, P160,000.
• Raw materials requisitioned for use in production, P140,000 (materials costing P120,000 were
chargeable directly to jobs, the remaining materials were indirect).
Costs for employee services were incurred as follows:
Direct labor
Indirect labor
P90,000
60,000
20,000
50,000
Sales commissions
Administrative salaries
• Prepaid insurance expired during the year, P18,000 (13,000 of this amount related to factory
operations, and the remainder related to selling and administrative activities).
• Utity costs incurred in the factory, P10,000.
• Advertising costs incurred, P15,000
Depreciation recorded on equipment, P25,000. (P20,000 of this amount was on equipment used
in factory operations, the remaining was on equipment used in selling and administrative
activities).
Manufacturing overhead to production is 120% of direct labor.
• Goods that had cost P310,000 to manufacture were transferred into the finished goods
warehouse.
Sales to customers during the year totaled P498,000. These goods had cost P308,000 to
manufacture
Required:
• Prepare journal entries to record the transactions for the year.
+ Compute the ending balances of the Work in process and Finished goods account.
+ How much is the under/overapplied manufacturing overhead?
• Prepare a statement of cost of goods sold for the year.
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