Creation Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2014  Creation Co. uses a​ normal-costing system and allocates overhead to work in process at a rate of $3.20 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials.   Requirements 1. Prepare journal entries to record the transactions for 2014 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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Topic Video
Question
Creation
Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2014 
Creation Co. uses a​ normal-costing system and allocates overhead to work in process at a rate of $3.20 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials.
 
Requirements
1.
Prepare journal entries to record the transactions for
2014 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.
   

 

Costs incurred:
 
Purchases of direct materials (net) on credit
$129,000
Direct manufacturing labor cost
84,000
Indirect labor
54,800
Depreciation, factory equipment
35,000
Depreciation, office equipment
7,400
Maintenance, factory equipment
27,000
Miscellaneous factory overhead
9,800
Rent, factory building
72,000
Advertising expense
97,000
Sales commissions
31,000
 
Inventories:
   
 
January 1, 2014
December 31, 2014
Direct materials
$9,700
$12,000
Work in process
6,000
26,000
Finished goods
60,000
28,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Costing Systems
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education