Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded. Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Notes payable Common stock Retained earnings (prior year) Sales Cost of goods sold Factory overhead General and administrative expenses Totals Debit $ 75,000 44,000 27,000 0 12,000 4,000 Credit $ 8,800 11,800 40,000 84,000 202,400 106,000 25,000 54,000 $ 347,000 $ 347,000 These six documents must be processed to bring the accounting records up to date. $ 4,800 direct materials to Job 402 Materials requisition 10: Materials requisition 11: Materials requisition 12: Labor time ticket 52: $ 7,600 direct materials to Job 404 $ 2,400 indirect materials. Labor time ticket 53: Labor time ticket 54: $ 8,000 direct labor to Job 402 $ 12,000 direct labor to Job 404 $ 5,000 indirect labor Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 100% of direct labor cost. . Prepare an income statement for the year and a balance sheet as of December 31. Hint: Retained earnings is $114,000 at the end of the current year. . Assume that the $2,400 on materials requisition 12 should have been direct materials charged to Job 404. Does this error result in overstatement or understatement of total assets?
Bergo Bay's accounting system generated the following account balances on December 31. The company's manager knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory, and the accrued factory payroll (Factory Wages Payable) has not been recorded. Cash Accounts receivable Raw materials inventory Work in process inventory Finished goods inventory Prepaid rent Accounts payable Notes payable Common stock Retained earnings (prior year) Sales Cost of goods sold Factory overhead General and administrative expenses Totals Debit $ 75,000 44,000 27,000 0 12,000 4,000 Credit $ 8,800 11,800 40,000 84,000 202,400 106,000 25,000 54,000 $ 347,000 $ 347,000 These six documents must be processed to bring the accounting records up to date. $ 4,800 direct materials to Job 402 Materials requisition 10: Materials requisition 11: Materials requisition 12: Labor time ticket 52: $ 7,600 direct materials to Job 404 $ 2,400 indirect materials. Labor time ticket 53: Labor time ticket 54: $ 8,000 direct labor to Job 402 $ 12,000 direct labor to Job 404 $ 5,000 indirect labor Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 100% of direct labor cost. . Prepare an income statement for the year and a balance sheet as of December 31. Hint: Retained earnings is $114,000 at the end of the current year. . Assume that the $2,400 on materials requisition 12 should have been direct materials charged to Job 404. Does this error result in overstatement or understatement of total assets?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Bergo Bay's accounting system generated the following account balances on December 31. The company's manager
knows something is wrong with this list of balances because it does not show any balance for Work in Process Inventory,
and the accrued factory payroll (Factory Wages Payable) has not been recorded.
Cash
Accounts receivable
Raw materials inventory
Work in process inventory
Finished goods inventory
Prepaid rent
Accounts payable
Notes payable
Common stock
Retained earnings (prior year)
Sales
Cost of goods sold
Factory overhead
General and administrative expenses
Totals
Debit
$ 75,000
44,000
27,000
0
12,000
4,000
106,000
25,000
54,000
$ 347,000
Credit
$ 8,800
11,800
40,000
84,000
202,400
$ 347,000
These six documents must be processed to bring the accounting records up to date.
Materials requisition 10:
Materials requisition 11:
Materials requisition 12:
Labor time ticket 52:
Labor time ticket 53:
Labor time ticket 54:
$ 4,800 direct materials to Job 402
$ 7,600 direct materials to Job 404
$ 2,400 indirect materials
$ 8,000 direct labor to Job 402
$ 12,000 direct labor to Job 404
$5,000 indirect labor
Jobs 402 and 404 are the only jobs in process at year-end. The predetermined overhead rate is 100% of direct labor cost.
4. Prepare an income statement for the year and a balance sheet as of December 31. Hint: Retained earnings is $114,000 at the end
of the current year.
5. Assume that the $2,400 on materials requisition 12 should have been direct materials charged to Job 404. Does this error result
in overstatement or understatement of total assets?
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