3. The following costs were accrued for employee services: direct labor, $75,000; indirect labor, $110,000; sales commissions, $90,000; and administrative salaries, $180,000. 4. Sales travel costs were $19,000. 5. Utility costs in the factory were $38,000. 6. Advertising costs were $90,000. 7. Depreciation was recorded for the year, $350,000 (80% relates to factory operations, and 20% relates to selling and administrative activities). 8. Insurance expired during the year, $10,000 (90% relates to factory operations, and the remaining10% relates to selling and administrative activities). 9. Manufacturing overhead was applied to production. Due to greater than expected demand for its products, the company worked 80,000 machine-hours on all jobs during the year. 10. Goods costing $900,000 to manufacture according to their job cost sheets were completed during the year. 11. Goods were sold on account to customers during the year for a total of $1,500,000. The goods cost $870,000 to manufacture according to their job cost sheets. Required: 1. Prepare journal entries to record the transactions. 2. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Do not allocate the balance between ending inventories and Cost of Goods Sold.
3. The following costs were accrued for employee services: direct labor, $75,000; indirect labor, $110,000; sales commissions, $90,000; and administrative salaries, $180,000. 4. Sales travel costs were $19,000. 5. Utility costs in the factory were $38,000. 6. Advertising costs were $90,000. 7. Depreciation was recorded for the year, $350,000 (80% relates to factory operations, and 20% relates to selling and administrative activities). 8. Insurance expired during the year, $10,000 (90% relates to factory operations, and the remaining10% relates to selling and administrative activities). 9. Manufacturing overhead was applied to production. Due to greater than expected demand for its products, the company worked 80,000 machine-hours on all jobs during the year. 10. Goods costing $900,000 to manufacture according to their job cost sheets were completed during the year. 11. Goods were sold on account to customers during the year for a total of $1,500,000. The goods cost $870,000 to manufacture according to their job cost sheets. Required: 1. Prepare journal entries to record the transactions. 2. Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Do not allocate the balance between ending inventories and Cost of Goods Sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sweeten Company is a manufacturer that uses job-order costing. On March 1,
the company's inventory balances were as follows:
Raw materials
Work in process . .
Finished goods
$40,000
$30,000
$60,000
Sweeten Company applies overhead cost to jobs on the basis of machine-hours
worked. For the current year, the company's predetermined overhead rate was
based on a cost formula that estimated $900,000 of total manufacturing
overhead for an estimated activity level of 150,000 machine-hours.
The following transactions were recorded for the year:
1. Raw materials were purchased on account, $600,000.
2. Raw materials were requisitioned for use in production, $400,000 ($370,000 direct
materials and $30,000 indirect materials).
3. The following costs were accrued for employee services: direct labor, $75,000;
indirect labor, $110,000; sales commissions, $90,000; and administrative salaries,
$180,000.
4. Sales travel costs were $19,000.
5. Utility costs in the factory were $38,000.
6. Advertising costs were $90,000.
7. Depreciation was recorded for the year, $350,000 (80% relates to factory operations,
and 20% relates to selling and administrative activities).
8. Insurance expired during the year, $10,000 (90% relates to factory operations, and
the remaining10% relates to selling and administrative activities).
9. Manufacturing overhead was applied to production. Due to greater than expected
demand for its products, the company worked 80,000 machine-hours on all jobs
during the year.
10. Goods costing $900,000 to manufacture according to their job cost sheets were
completed during the year.
11. Goods were sold on account to customers during the year for a total of $1,500,000.
The goods cost $870,000 to manufacture according to their job cost sheets.
Required:
1. Prepare journal entries to record the transactions.
2.
Is Manufacturing Overhead underapplied or overapplied for the year? Prepare a journal
entry to close any balance in the Manufacturing Overhead account to Cost of Goods
Sold. Do not allocate the balance between ending inventories and Cost of Goods Sold.
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