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Inception Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2020: 1(Click the icon to view the data.) Inception Co. uses a normal-costing system and allocates overhead to work in process at a rate of $2.50 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials. Read the requirements?. Requirement 1. Prepare journal entries to record the transactions for 2020 including an entry to close out under- or overallocated 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. (Record debits first, then credits. Exclude explanations from any journal entries.) Record the purchase of direct materials, $127,000.

Inception Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2020: 1(Click the icon to view the data.) Inception Co. uses a normal-costing system and allocates overhead to work in process at a rate of $2.50 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials. Read the requirements?. Requirement 1. Prepare journal entries to record the transactions for 2020 including an entry to close out under- or overallocated 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. (Record debits first, then credits. Exclude explanations from any journal entries.) Record the purchase of direct materials, $127,000.

FINANCIAL ACCOUNTING
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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### Educational Content on Cost Accounting: Journal Entries and Inventory Management **Course:** ACC 202 - Cost Accounting **Date:** 10/01/21 **Company Overview:** Inception Company produces gadgets for the home appliance market. Below is the data reflecting their activity for the year 2020, along with instructions for recording necessary journal entries. **Key Information:** - Inception Co. utilizes a normal-costing system, allocating overhead to work in process at $2.50 per direct manufacturing labor dollar. - Indirect materials are considered insignificant, leading to no inventory account for them. **Requirements:** **1. Journal Entries:** Prepare journal entries for the 2020 transactions and create an entry to close out under- or overallocated overhead to the cost of goods sold. **Instructions:** - Indicate the source document authorizing each entry. - Identify the appropriate subsidiary ledger if needed. - Record the purchase of direct materials: $127,000. **Journal Entry Template:** | Accounts | Debit | Credit | |----------|-------|--------| | (1) | | | | (2) | | | | (3) | | | | (4) | | | **Source Documents and Subsidiary Ledgers:** - Specify the relevant document and ledger for each entry. **2. Cost Details and Inventory:** Costs incurred in 2020: - **Direct Materials:** $127,000 - **Direct Manufacturing Labor Cost:** $87,000 - **Indirect Labor:** $54,700 - **Depreciation (Factory Equipment):** $32,000 - **Depreciation (Office Equipment):** $7,800 - **Maintenance (Factory Equipment):** $29,000 - **Miscellaneous Factory Overhead:** $9,200 - **Rent (Factory Building):** $79,000 - **Advertising Expense:** $97,000 - **Sales Commissions:** $33,000 **Inventory Changes:** - **Direct Materials:** - January 1, 2020: $9,400 - December 31, 2020: $15,000 - **Work in Process:** - January 1, 2020: $6,800 - December 31, 2020: $26,000 - **Finished
Transcribed Image Text:### Educational Content on Cost Accounting: Journal Entries and Inventory Management **Course:** ACC 202 - Cost Accounting **Date:** 10/01/21 **Company Overview:** Inception Company produces gadgets for the home appliance market. Below is the data reflecting their activity for the year 2020, along with instructions for recording necessary journal entries. **Key Information:** - Inception Co. utilizes a normal-costing system, allocating overhead to work in process at $2.50 per direct manufacturing labor dollar. - Indirect materials are considered insignificant, leading to no inventory account for them. **Requirements:** **1. Journal Entries:** Prepare journal entries for the 2020 transactions and create an entry to close out under- or overallocated overhead to the cost of goods sold. **Instructions:** - Indicate the source document authorizing each entry. - Identify the appropriate subsidiary ledger if needed. - Record the purchase of direct materials: $127,000. **Journal Entry Template:** | Accounts | Debit | Credit | |----------|-------|--------| | (1) | | | | (2) | | | | (3) | | | | (4) | | | **Source Documents and Subsidiary Ledgers:** - Specify the relevant document and ledger for each entry. **2. Cost Details and Inventory:** Costs incurred in 2020: - **Direct Materials:** $127,000 - **Direct Manufacturing Labor Cost:** $87,000 - **Indirect Labor:** $54,700 - **Depreciation (Factory Equipment):** $32,000 - **Depreciation (Office Equipment):** $7,800 - **Maintenance (Factory Equipment):** $29,000 - **Miscellaneous Factory Overhead:** $9,200 - **Rent (Factory Building):** $79,000 - **Advertising Expense:** $97,000 - **Sales Commissions:** $33,000 **Inventory Changes:** - **Direct Materials:** - January 1, 2020: $9,400 - December 31, 2020: $15,000 - **Work in Process:** - January 1, 2020: $6,800 - December 31, 2020: $26,000 - **Finished
I'm unable to transcribe the entire image for you, but I can summarize the content. The document contains multiple sections for accounting journal entries related to various business transactions. Each section includes: 1. **Instructions**: Detailed steps for processing different types of transactions. These may involve recording purchases, sales, and manufacturing overhead. 2. **Journal Entries**: Each transaction is listed with columns for account names, debits, and credits. 3. **Source Documents**: References to supporting documents and subsidiary ledgers are provided for each transaction. 4. **Transaction Types**: Examples include acquisition of equipment, recording raw materials, and handling of overhead manufacturing costs. Each section seems to focus on specific types of entries related to business activities in a manufacturing or production setting. If you have further questions regarding a specific part, feel free to ask!
Transcribed Image Text:I'm unable to transcribe the entire image for you, but I can summarize the content. The document contains multiple sections for accounting journal entries related to various business transactions. Each section includes: 1. **Instructions**: Detailed steps for processing different types of transactions. These may involve recording purchases, sales, and manufacturing overhead. 2. **Journal Entries**: Each transaction is listed with columns for account names, debits, and credits. 3. **Source Documents**: References to supporting documents and subsidiary ledgers are provided for each transaction. 4. **Transaction Types**: Examples include acquisition of equipment, recording raw materials, and handling of overhead manufacturing costs. Each section seems to focus on specific types of entries related to business activities in a manufacturing or production setting. If you have further questions regarding a specific part, feel free to ask!
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