PROBLEM 3A-4 Transaction Analysis LO3-5Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on Jamuary 1 is Page 145as follows:Morrison CompanyBalance SheetJamary 1AssetsCash$ 32,000Raw materials$ 9,000Work in process4,000Finished goods17,00030,000Prepaid expenses2,000Property, plant, and equipment (net)190,000Total assets$254,000Liabilities and Stockholders' EquityAccounts payable$ 7,000Retained earnings247,000Total liabilities and stockholders' equity$254,000During January the company completed the following transactions:a. Purchased raw materials on account, $74,000.b. Raw materials used in production, S77,000 ($67,000 was direct materials and $10,000 was indirect materials).c. Paid $167,000 of salaries and wages in cash ($95,000 was direct labor, $35,000 was indirect labor, and $37,000 was related toemployees responsible for selling and administration).d. Various manufacturing overhead costs incurred (on account) to support production, $3,000.e. Depreciation recorded on property, plant, and equipment, $90,000 (70% related to manufacturing equipment and 30% related toassets that support selling and administration).f. Various selling expenses paid in cash, $27,000.2. Prepaid insurance expired during the month, $1,200 (80% related to production, and 20% related to selling and administration).h. Manufacturing oerhead applied to production, $132,000.i. Cost of goods manufactured, $288,000.j. Cash sales to customers, $395,000.k Cost of goods sold (unadjusted), $285,000.1. Cash payments to creditors, $62,000.m. Cnderapplied or overapplied overhead 8 ?.Required:1. Calculate the ending balances that would be reported on the company's balance sheet on January 31. Yoa can derive your answersusing Microsoft Excel and e Exhibit 3A-2 2s your guide, or you can use paper, pencil, and a calculator. (Hint: Be sure tocalculate the underapplied or overapplied overhead and then account for its affect on the balance sheet)2. What is Morrison Company's net operating income for the month of January?Page 146

Operating income is an accounting term that refers to the amount of profit generated by a company's…

Morrison Company uzes a joberder costing system to assign manufacturing couts to job. Itu balance sheet on Jamuary 1 is Page i as follows: Morrison Company Balance Sheet Jamuary 1 Assets $ 32,000 $ 9,000 Cash Raw materials Work in process 4,000 Finished goods 17,000 30,000 Prepaid expenses 2,000 Property, plant, and equipement (net) 190,000 Total assets $254,000 Liabilities and Stockholders' Equity Accounts payable $ 7000 Ratained earnings 247,000 Total labilities and stockholders" equity $254,000 During Jamuary the company completed the following transactions: a. Purchased raw materials on account, $74,000. b. Raw materials used in production, 877,000 (867,000 was direct materials and S10,000 was indirect materiala). c. Paid $167,000 of salaries and wages in cash ($95,000 was direct labor, $35,000 was indirect labor, and $37,000 was related to employees responsible for selling and administration). d. Various manufacturing overhead costs incurred (on account) to support production, $33,000. e. Depreciation recorded on property, plant, and equipment, $90,000 (7O% related to manufacturing equipmant and 30% related to assets that support selling and administration). £ Various selling xpenses paid in cath, $27,000. 2. Prepaid insurance expired during the month, $1,200 (30% related to production, and 20% related to selling and administration). a. Manufacturing overhead applied to production, $132,000. i. Cost of goods manufactured, $288,000. j. Cash sales to customers, $395,000. k Cost of goods sold (unadjusted), $285,000. 1 Cash payments to creditors, $62,000. m. Underapplied or overapplied overhead 8_?_. Required: 1. Calculate the ending balances that would be reported on the company's balance sheet on January 31. You can derive your answe using Microsoft Excel and Exhibit 3A-a your guide, or you can use paper, pencil, and a calculator. (Hint: Be sure to calculate the underapplied or overapplied overbead and then account for its affect on the balance sheet.) 2. What is Morrison Company's set operatine income for the month of January?