Forest Components makes aircraft parts. The following transactions occurred in July. Purchased $16,820 of materials on account. Issued $16,780 in direct materials to the production department. Issued $1,270 of supplies from the materials inventory. Paid for the materials purchased in transaction (1) using cash. Returned $2,180 of the materials issued to production in (2) to the materials inventory. Direct labor employees earned $32,000, which was paid in cash. Purchased miscellaneous items for the manufacturing plant for $17,260 on account. Recognized depreciation on manufacturing plant of $35,600. Applied manufacturing overhead for the month. Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $434,400. Estimated overhead for the year was $386,616. The following balances appeared in the inventory accounts of Forest Components for July. Beginning Ending Materials Inventory ? $ 12,540 Work-in-Process Inventory ? 10,520 Finished Goods Inventory $ 2,740 6,940 Cost of Goods Sold ? 74,800 Required: a. Prepare journal entries to record these transactions.
Exercise 7-24 (Algo) Assigning Costs to Jobs (LO 7-1, 2)
Forest Components makes aircraft parts. The following transactions occurred in July.
-
Purchased $16,820 of materials on account.
-
Issued $16,780 in direct materials to the production department.
-
Issued $1,270 of supplies from the materials inventory.
-
Paid for the materials purchased in transaction (1) using cash.
-
Returned $2,180 of the materials issued to production in (2) to the materials inventory.
-
Direct labor employees earned $32,000, which was paid in cash.
-
Purchased miscellaneous items for the manufacturing plant for $17,260 on account.
-
Recognized
depreciation on manufacturing plant of $35,600. -
Applied manufacturing
overhead for the month.
Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $434,400. Estimated overhead for the year was $386,616.
The following balances appeared in the inventory accounts of Forest Components for July.
| Beginning | Ending | ||||
| Materials Inventory | ? | $ | 12,540 | ||
| Work-in-Process Inventory | ? | 10,520 | |||
| Finished Goods Inventory | $ | 2,740 | 6,940 | ||
| Cost of Goods Sold | ? | 74,800 | |||
Required:
a. Prepare
b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.
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