During the month of August 2020, Xylon Inc. commenced manufacturing of a product called Argon. The following transactions took place. August 1, stockholders paid cash for 100 million stocks with par value of $1 per share and market price of $11 per share. August 1, purchased machinery and Equipment for $40 million cash (Depreciation expense is $1million every month) August 1, purchased raw materials ($50 million direct materials, $4 million indirect materials) for $54 million cash and all materials moved into production immediately. August 20 the company records applied overhead at the rate of 80% of direct material costs August 28, paid cash for manufacturing labor services, $112 million ($100 million direct labor and $12 million indirect labor). August 31, actual costs of other overhead items was calculated to be $34 million. August 31, all the goods charged into production were completed and moved to Finished Goods Inventory Account. August 31, 90% of the completed goods were sold for cash at a markup of 20 % of the cost before adjusting for over or under applied overhead costs.
During the month of August 2020, Xylon Inc. commenced manufacturing of a product called Argon. The following transactions took place.
August 1, stockholders paid cash for 100 million stocks with par value of $1 per share and market price of $11 per share.
August 1, purchased machinery and Equipment for $40 million cash (
August 1, purchased raw materials ($50 million direct materials, $4 million indirect materials) for $54 million cash and all materials moved into production immediately.
August 20 the company records applied
August 28, paid cash for manufacturing labor services, $112 million ($100 million direct labor and $12 million indirect labor).
August 31, actual costs of other overhead items was calculated to be $34 million.
August 31, all the goods charged into production were completed and moved to Finished Goods Inventory Account.
August 31, 90% of the completed goods were sold for cash at a markup of 20 % of the cost before adjusting for over or under applied overhead costs.
Required: Make the relevant T Accounts entries to record these transactions from the beginning to the closing of the temporary accounts at the end of August, assuming that the discrepancy between applied and actual overhead is NOT considered substantial. Prepared adjusted
Now Your Turn (Submit on or before November 12, 2020)
September 1, purchased raw materials ($120 million direct materials, $10 million indirect materials) for $130 million cash
September 2, moved all the raw material into production.
September 22 the company records applied overhead at the rate of 80% of direct material costs
September 29, paid cash for manufacturing labor services, $220 million ($200 million direct labor and $20 million indirect labor).
September 30, actual costs of other overhead items was calculated to be $76 million.
September 30, all the goods charged into production were completed and moved to Finished Goods Inventory Account.
September 30, 95% of the completed goods were sold for cash at a markup of 15 % of the cost before adjusting for over or under applied overhead costs.
Required: Make the relevant T Accounts entries to record these transactions from the beginning of September to the closing of the temporary accounts at the end of September, assuming that the discrepancy between applied and actual overhead is NOT considered substantial. Prepare adjusted trial balance, Income Statement and Balance Sheet. Assume no taxes ignore other costs. Attach all the necessary source documents needed for these entries.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
