Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process $ 10, 200 $ 4,600 $ 8,900 Finished goods During the year, the following transactions were completed: a. Raw materials purchased on account, $163,000. b. Raw materials used in production, $146,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: $ 155,000 $ 244,500 2$ Direct labor Indirect labor Sales commissions 26,000 $ Administrative salaries 42,000 d. Rent for the year was $18,200 ($13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $10,000. f. Advertising costs incurred, $14,000. g. Depreciation recorded on equipment, $24,000. ($18,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, $_ ?_. i. Goods that had cost $229,000 to manufacture according to their job cost sheets were completed. j. Sales for the year (all paid in cash) totaled $504,000. The total cost to manufacture these goods according to their job cost sheets was $217,00O. Required: 1. Prepare journal entries to record the transactions for the year.
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows: Raw materials Work in process $ 10, 200 $ 4,600 $ 8,900 Finished goods During the year, the following transactions were completed: a. Raw materials purchased on account, $163,000. b. Raw materials used in production, $146,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were indirect). c. Costs for employee services were incurred as follows: $ 155,000 $ 244,500 2$ Direct labor Indirect labor Sales commissions 26,000 $ Administrative salaries 42,000 d. Rent for the year was $18,200 ($13,400 of this amount related to factory operations, and the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $10,000. f. Advertising costs incurred, $14,000. g. Depreciation recorded on equipment, $24,000. ($18,000 of this amount related to equipment used in factory operations; the remaining $6,000 related to equipment used in selling and administrative activities.) h. Manufacturing overhead cost was applied to jobs, $_ ?_. i. Goods that had cost $229,000 to manufacture according to their job cost sheets were completed. j. Sales for the year (all paid in cash) totaled $504,000. The total cost to manufacture these goods according to their job cost sheets was $217,00O. Required: 1. Prepare journal entries to record the transactions for the year.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company
sells its birdcages through an extensive network of street vendors who receive commissions on their sales.
The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined
overhead rate is based on a cost formula that estimated $94,500 of manufacturing overhead for an estimated activity level of $45,000
direct labor dollars. At the beginning of the year, the inventory balances were as follows:
$ 10, 200
$ 4,600
$ 8,900
Raw materials
Work in process
Finished goods
During the year, the following transactions were completed:
a. Raw materials purchased on account, $163,000.
b. Raw materials used in production, $146,000 (materials costing $121,000 were charged directly to jobs; the remaining materials were
indirect).
c. Costs for employee services were incurred as follows:
$ 155,000
$ 244,500
26,000
$
Direct labor
Indirect labor
Sales commissions
Administrative salaries
42,000
d. Rent for the year was $18,200 ($13,400 of this amount related to factory operations, and the remainder related to selling and
administrative activities).
e. Utility costs incurred in the factory, $10,000.
f. Advertising costs incurred, $14,000.
g. Depreciation recorded on equipment, $24,000. ($18,000 of this amount related to equipment used in factory operations; the
remaining $6,000 related to equipment used in selling and administrative activities.)
h. Manufacturing overhead cost was applied to jobs, $_ ? .
i. Goods that had cost $229,000 to manufacture according to their job cost sheets were completed.
j. Sales for the year (all paid in cash) totaled $504,000. The total cost to manufacture these goods according to their job cost sheets
was $217,000.
Required:
1. Prepare journal entries to record the transactions for the year.
2. Prepare T-accounts for each inventory account, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your
journal entries to these T-accounts (don't forget to enter the beginning balances in your inventory accounts).
3A. Is Manufacturing Overhead underapplied or overapplied for the year?
3B. Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold.
4. Prepare an income statement for the year. All of the information needed for the income statement is available in the journal entries
and T-accounts you have prepared.
Transcribed Image Text:8 Answer is complete but not entirely correct.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3A
Req 3B
Req 4
Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No
journal entry required" in the first account field. Do not round intermediate calculations.)
No
Transaction
General Journal
Debit
Credit
1
Raw materials
163,000 O
а.
Accounts payable
163,000 O
2
b.
Work in process
121,000 O
Manufacturing overhead
25,000 O
Raw materials
146,000 O
3
Work in process
155,000 O
C.
Manufacturing overhead
244,500 O
Sales commisions expense
26,000 O
Administrative salaries expense
42,000 O
Cash
467,500 O
4
d.
Manufacturing overhead
13,400 O
Rent expense
4,800 O
Cash
18.200 O
Manufacturing overhead
10,000
е.
Cash
10,000 O
6
f.
Advertising expense
14,000 O
Cash
14,000
7
g.
Manufacturing overhead
18,000 O
Depreciation expense
6,000
Accumulated depreciation
24.000 O
8
h.
Work in process
325,500 O
Manufacturing overhead
325,500 O
i.
Finished goods
229,000 O
Work in process
229,000
10
j(1).
Cash
504,000 O
Sales
504,000 O
11
j(2).
Cost of goods sold
217,000
Finished goods
217,000 O
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