Finch Corporation makes rocking chairs. The chairs move through two departments during production. Lumber is cut into chair parts in the cutting department, which transfers the parts to the assembly department for completion. The company sells the unfinished chairs to hobby shops. The following transactions apply to Finch’s operations for its first year, Year 1. (Assume that all transactions are for cash unless otherwise stated.)The company was started when it acquired a $130,000 cash contribution from the owners.The company purchased $34,000 of direct raw materials and $800 of indirect materials. Indirect materials are capitalized in the Production Supplies account.Direct materials totaling $14,000 were issued to the cutting department.Labor cost was $51,600. Direct labor for the cutting and assembly departments was $18,000 and $25,000, respectively. Indirect labor costs were $8,600.The predetermined overhead rate was $0.50 per direct labor dollar in each department.Actual overhead costs other than indirect materials and indirect labor were $13,200 for the year.The cutting department transferred $24,000 of inventory to the assembly department.The assembly department transferred $40,000 of inventory to finished goods.The company sold inventory costing $36,000 for $63,000.Selling and administrative expenses were $6,000.A physical count revealed $300 of production supplies on hand at the end of Year 1.Assume that over- or underapplied overhead is insignificant.Required:Record the data in T-accounts.Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant.Close the revenue and expense accounts.Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1. **Instructions for Completing Accounting Entries****Tasks:**a. Record the data in T-accounts.b. Record the closing entry for over- or under-applied manufacturing overhead, assuming the amount is insignificant.c. Close the revenue and expense accounts.**Note:** The cash expenditures in Event No. 2 should be recorded as separate amounts in the Cash account. The closing entry for revenue and expenses should be made in one entry.**T-Accounts Layout:**1. **Cash** - **Debit** | **Credit** | | | | | | - **Ending Balance:** 2. **Common Stock** - **Debit** | **Credit** | | | | | | - **Ending Balance:** 3. **Raw Materials** - **Debit** | **Credit** | | | | | | - **Ending Balance:** 4. **Retained Earnings** - **Debit** | **Credit** | | | **Closing** | - **Ending Balance:** 5. **Manufacturing Overhead** - **Debit** | **Credit** | **Closing** | 6. **Revenue** - **Debit** | **Credit** | **Closing** | The diagram above shows the setup for various T-accounts necessary for the tasks listed. Each T-account is designed to help manage different financial components, such as cash flow, stock, materials, earnings, and overhead. Ensure to follow standard accounting procedures for accurate record-keeping. **Transcription of the Accounting Ledger Image**The image displays various accounting ledger templates for tracking financial transactions. Each section includes columns for debits and credits, along with rows for specific entries, such as closing and ending balances. Here are detailed descriptions for each ledger:1. **Manufacturing Overhead** - Debit | Credit - Includes fields for transactions with spaces for amounts. - Contains a row for the ending balance.2. **Work in Process—Cutting** - Debit | Credit - Used for tracking costs associated with the cutting phase of production. - Includes space for the ending balance.3. **Work in Process—Assembly** - Debit | Credit - Tracks costs for the assembly phase. - Includes space for the ending balance.4. **Finished Goods** - Debit | Credit - Used for tracking costs of completed goods ready for sale. - Contains room for the ending balance.5. **Production Supplies** - Debit | Credit - Keeps track of costs related to supplies used in production. - Includes space for the ending balance.6. **Revenue** - Debit | Credit - Includes fields for noting closing transactions. - Contains a row for the ending balance.7. **Cost of Goods Sold** - Debit | Credit - Used to track the direct costs attributable to the production of goods. - Includes space for a closing entry and an ending balance.8. **Selling & Administrative Expenses** - Debit | Credit - Keeps record of indirect costs related to selling and administrative tasks. - Contains a row for closing entries and an ending balance.Navigation buttons on the bottom allow for additional requirements, such as "Req A to C" and "Req D1 CGM Sched," indicating further detailed schedules or requirements possibly related to cost management.

Name: Finch Corporation makes rocking chairs. The chairs move through two de
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Description: Finch Corporation makes rocking chairs. The chairs move through two departments during production. Lumber is cut into chair parts in the cutting department, which transfers the parts to the assembly department for completion. The company sells the un

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Finch Corporation makes rocking chairs. The chairs move through two departments during production. Lumber is cut into chair parts in the cutting department, which transfers the parts to the assembly department for completion. The company sells the unfinished chairs to hobby shops. The following transactions apply to Finch’s operations for its first year, Year 1. (Assume that all transactions are for cash unless otherwise stated.) The company was started when it acquired a $130,000 cash contribution from the owners. The company purchased $34,000 of direct raw materials and $800 of indirect materials. Indirect materials are capitalized in the Production Supplies account. Direct materials totaling $14,000 were issued to the cutting department. Labor cost was $51,600. Direct labor for the cutting and assembly departments was $18,000 and $25,000, respectively. Indirect labor costs were $8,600. The predetermined overhead rate was $0.50 per direct labor dollar in each department. Actual overhead costs other than indirect materials and indirect labor were $13,200 for the year. The cutting department transferred $24,000 of inventory to the assembly department. The assembly department transferred $40,000 of inventory to finished goods. The company sold inventory costing $36,000 for $63,000. Selling and administrative expenses were $6,000. A physical count revealed $300 of production supplies on hand at the end of Year 1. Assume that over- or underapplied overhead is insignificant. Required: Record the data in T-accounts. Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant. Close the revenue and expense accounts. Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1.

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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Required:

Record the data in T-accounts.
Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant.
Close the revenue and expense accounts.
Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for Year 1.

**Instructions for Completing Accounting Entries**

**Tasks:**
a. Record the data in T-accounts.
b. Record the closing entry for over- or under-applied manufacturing overhead, assuming the amount is insignificant.
c. Close the revenue and expense accounts.

**Note:** The cash expenditures in Event No. 2 should be recorded as separate amounts in the Cash account. The closing entry for revenue and expenses should be made in one entry.

**T-Accounts Layout:**

1. **Cash**
- **Debit** | **Credit**
| |
| |
| |
- **Ending Balance:**

2. **Common Stock**
- **Debit** | **Credit**
| |
| |
| |
- **Ending Balance:**

3. **Raw Materials**
- **Debit** | **Credit**
| |
| |
| |
- **Ending Balance:**

4. **Retained Earnings**
- **Debit** | **Credit**
| |
| **Closing** |
- **Ending Balance:**

5. **Manufacturing Overhead**
- **Debit** | **Credit**
| **Closing** |

6. **Revenue**
- **Debit** | **Credit**
| **Closing** |

The diagram above shows the setup for various T-accounts necessary for the tasks listed. Each T-account is designed to help manage different financial components, such as cash flow, stock, materials, earnings, and overhead. Ensure to follow standard accounting procedures for accurate record-keeping.

**Transcription of the Accounting Ledger Image**

The image displays various accounting ledger templates for tracking financial transactions. Each section includes columns for debits and credits, along with rows for specific entries, such as closing and ending balances. Here are detailed descriptions for each ledger:

1. **Manufacturing Overhead**
- Debit | Credit
- Includes fields for transactions with spaces for amounts.
- Contains a row for the ending balance.

2. **Work in Process—Cutting**
- Debit | Credit
- Used for tracking costs associated with the cutting phase of production.
- Includes space for the ending balance.

3. **Work in Process—Assembly**
- Debit | Credit
- Tracks costs for the assembly phase.
- Includes space for the ending balance.

4. **Finished Goods**
- Debit | Credit
- Used for tracking costs of completed goods ready for sale.
- Contains room for the ending balance.

5. **Production Supplies**
- Debit | Credit
- Keeps track of costs related to supplies used in production.
- Includes space for the ending balance.

6. **Revenue**
- Debit | Credit
- Includes fields for noting closing transactions.
- Contains a row for the ending balance.

7. **Cost of Goods Sold**
- Debit | Credit
- Used to track the direct costs attributable to the production of goods.
- Includes space for a closing entry and an ending balance.

8. **Selling & Administrative Expenses**
- Debit | Credit
- Keeps record of indirect costs related to selling and administrative tasks.
- Contains a row for closing entries and an ending balance.

Navigation buttons on the bottom allow for additional requirements, such as "Req A to C" and "Req D1 CGM Sched," indicating further detailed schedules or requirements possibly related to cost management.

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