4-30 Journal entries, T-accounts, and source documents. Visual Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2017: Costs incurred: Purchases of direct materials (net) on credit $121,000 Direct manufacturing labor cost 87,000 Indirect labor 54,400 Depreciation, factory equipment 53,000 Depreciation, office equipment 7,700 Maintenance, factory equipment 46,000 Miscellaneous factory overhead 9,100 Rent, factory building 99,000 Advertising expense 97,000 Sales commissions 39,000 Inventories: January 1, 2017 December 31, 2017 Direct materials $ 9,400 $18,000 Work in process 6,500 26,000 Finished goods 60,000 31,000 Visual Co. uses a normal-costing system and allocates overhead to work in process at a rate of $3.10 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials. 1. Prepare journal entries to record the transactions for 2017 including an entry to close out over- or underallocated overhead to cost of goods sold. For each journal entry indicate the source document that would be used to authorize each entry. Also note which subsidiary ledger, if any, should be referenced as backup for the entry. 2. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold, the Manufacturing Overhead Control Account, and the Manufacturing Overhead Allocated Account.
4-30 Journal entries, T-accounts, and source documents. Visual Company produces gadgets for the
coveted small appliance market. The following data reflect activity for the year 2017:
Costs incurred:
Purchases of direct materials (net) on credit $121,000
Direct
Indirect labor 54,400
Depreciation, factory equipment 53,000
Depreciation, office equipment 7,700
Maintenance, factory equipment 46,000
Miscellaneous factory
Rent, factory building 99,000
Advertising expense 97,000
Sales commissions 39,000
Inventories:
January 1, 2017 December 31, 2017
Direct materials $ 9,400 $18,000
Work in process 6,500 26,000
Finished goods 60,000 31,000
Visual Co. uses a normal-costing system and allocates overhead to work in process at a rate of $3.10 per
direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for
indirect materials.
1. Prepare journal entries to record the transactions for 2017 including an entry to close out over- or underallocated
overhead to cost of goods sold. For each
as backup for the entry.
2.
Overhead Control Account, and the Manufacturing Overhead Allocated Account.
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