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Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process $ 10, 200 $ 4,600 $ 8,900 Finished goods During the year, the following transactions were completed: a. Raw materials purchased on account, $163,000. b. Raw materials used in production, $146,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: $ 155,000 $ 244,500 2$ Direct labor Indirect labor Sales commissions 26,000 $ Administrative salaries 42,000 d. Rent for the year was $18,200 ($13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $10,000. f. Advertising costs incurred, $14,000. g. Depreciation recorded on equipment, $24,000. ($18,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, $_ ?_. i. Goods that had cost $229,000 to manufacture according to their job cost sheets were completed. j. Sales for the year (all paid in cash) totaled $504,000. The total cost to manufacture these goods according to their job cost sheets was $217,00O. Required: 1. Prepare journal entries to record the transactions for the year.

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process $ 10, 200 $ 4,600 $ 8,900 Finished goods During the year, the following transactions were completed: a. Raw materials purchased on account, $163,000. b. Raw materials used in production, $146,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: $ 155,000 $ 244,500 2$ Direct labor Indirect labor Sales commissions 26,000 $ Administrative salaries 42,000 d. Rent for the year was $18,200 ($13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $10,000. f. Advertising costs incurred, $14,000. g. Depreciation recorded on equipment, $24,000. ($18,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, $_ ?_. i. Goods that had cost $229,000 to manufacture according to their job cost sheets were completed. j. Sales for the year (all paid in cash) totaled $504,000. The total cost to manufacture these goods according to their job cost sheets was $217,00O. Required: 1. Prepare journal entries to record the transactions for the year.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: $ 10, 200 $ 4,600 $ 8,900 Raw materials Work in process Finished goods During the year, the following transactions were completed: a. Raw materials purchased on account, $163,000. b. Raw materials used in production, $146,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: $ 155,000 $ 244,500 26,000 $ Direct labor Indirect labor Sales commissions Administrative salaries 42,000 d. Rent for the year was $18,200 ($13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $10,000. f. Advertising costs incurred, $14,000. g. Depreciation recorded on equipment, $24,000. ($18,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, $_ ? . i. Goods that had cost $229,000 to manufacture according to their job cost sheets were completed. j. Sales for the year (all paid in cash) totaled $504,000. The total cost to manufacture these goods according to their job cost sheets was $217,000. Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts). 3A. Is Manufacturing Overhead underapplied or overapplied for the year? 3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.
Transcribed Image Text:Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: $ 10, 200 $ 4,600 $ 8,900 Raw materials Work in process Finished goods During the year, the following transactions were completed: a. Raw materials purchased on account, $163,000. b. Raw materials used in production, $146,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: $ 155,000 $ 244,500 26,000 $ Direct labor Indirect labor Sales commissions Administrative salaries 42,000 d. Rent for the year was $18,200 ($13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $10,000. f. Advertising costs incurred, $14,000. g. Depreciation recorded on equipment, $24,000. ($18,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, $_ ? . i. Goods that had cost $229,000 to manufacture according to their job cost sheets were completed. j. Sales for the year (all paid in cash) totaled $504,000. The total cost to manufacture these goods according to their job cost sheets was $217,000. Required: 1. Prepare journal entries to record the transactions for the year. 2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts). 3A. Is Manufacturing Overhead underapplied or overapplied for the year? 3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. 4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries and T-accounts you have prepared.
8 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Req 4 Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) No Transaction General Journal Debit Credit 1 Raw materials 163,000 O а. Accounts payable 163,000 O 2 b. Work in process 121,000 O Manufacturing overhead 25,000 O Raw materials 146,000 O 3 Work in process 155,000 O C. Manufacturing overhead 244,500 O Sales commisions expense 26,000 O Administrative salaries expense 42,000 O Cash 467,500 O 4 d. Manufacturing overhead 13,400 O Rent expense 4,800 O Cash 18.200 O Manufacturing overhead 10,000 е. Cash 10,000 O 6 f. Advertising expense 14,000 O Cash 14,000 7 g. Manufacturing overhead 18,000 O Depreciation expense 6,000 Accumulated depreciation 24.000 O 8 h. Work in process 325,500 O Manufacturing overhead 325,500 O i. Finished goods 229,000 O Work in process 229,000 10 j(1). Cash 504,000 O Sales 504,000 O 11 j(2). Cost of goods sold 217,000 Finished goods 217,000 O
Transcribed Image Text:8 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Req 4 Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) No Transaction General Journal Debit Credit 1 Raw materials 163,000 O а. Accounts payable 163,000 O 2 b. Work in process 121,000 O Manufacturing overhead 25,000 O Raw materials 146,000 O 3 Work in process 155,000 O C. Manufacturing overhead 244,500 O Sales commisions expense 26,000 O Administrative salaries expense 42,000 O Cash 467,500 O 4 d. Manufacturing overhead 13,400 O Rent expense 4,800 O Cash 18.200 O Manufacturing overhead 10,000 е. Cash 10,000 O 6 f. Advertising expense 14,000 O Cash 14,000 7 g. Manufacturing overhead 18,000 O Depreciation expense 6,000 Accumulated depreciation 24.000 O 8 h. Work in process 325,500 O Manufacturing overhead 325,500 O i. Finished goods 229,000 O Work in process 229,000 10 j(1). Cash 504,000 O Sales 504,000 O 11 j(2). Cost of goods sold 217,000 Finished goods 217,000 O
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