Basic cost system; journal entries; financial statements similar to Self-Study Problem 1 The post-closing trial balance of Beamer Manufacturing Co. on April 30 is reproduced as follows:
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
Basic cost system; journal entries; financial statements
similar to Self-Study Problem 1
The post-closing
April 30 is reproduced as follows:
Beamer Manufacturing Co.
Post-Closing Trial Balance
April 30, 2011
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000
Finished Goods .................................. 120,000
Work in Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35,000
Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000
Building . . . ...................................... 480,000
Accumulated
Factory Equipment . . ............................ 220,000
Accumulated Depreciation—Factory Equipment . . . 66,000
Office Equipment ................................ 60,000
Accumulated Depreciation—Office Equipment . . . . 36,000
Accounts Payable . . .............................. 95,000
Capital Stock .................................... 250,000
Retained Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 504,000
$ 1,023,000 $ 1,023,000
During the month of May, the following transactions took place:
a. Purchased raw materials at a cost of $45,000 and general
factory supplies at a cost of $13,000 on account (recorded
materials and supplies in the materials account).
b. Issued raw materials to be used in production, costing
$47,000, and miscellaneous factory supplies, costing
$15,000.
c. Recorded the payroll, the payments to employees, and the
distribution of the wages and salaries earned for the month
as follows: factory wages (including $12,000 indirect labor),
$41,000; and selling and administrative salaries, $7,000.
Additional account titles include Wages Payable and Payroll.
(Ignore payroll withholdings and deductions.)
d. Recognized depreciation for the month at an annual rate of
5% on the building, 10% on the factory equipment, and 20%
on the office equipment. The sales and administrative staff
uses approximately one-fifth of the building for its offices.
e. Incurred various other expenses totaling $11,000. One-fourth
of this amount is allocable to the office function.
f. Transferred total
LO4
LO5
56 Principles of Cost Accounting
g. Completed and transferred goods with a total cost of $91,000
to the finished goods storeroom.
h. Sold goods costing $188,000 for $362,000. (Assume that all
sales were made on account.)
i. Collected accounts receivable in the amount of $345,000.
j. Paid accounts payable totaling $158,000.
Required:
1. Prepare journal entries to record the transactions.
2. Set up T-accounts. Post the beginning trial balance and the
journal entries prepared in (1) to the accounts and determine
the balances in the accounts on May 31.
3. Prepare a statement of cost of goods manufactured, an
income statement, and a balance sheet. (Round amounts to
the nearest whole dollar.)
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