I am a littl lost with the blanks in red (attached) thank you for any help Oberti Guitar Company makes high-quality customized guitars. Oberti uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $300,000 and that 20,000 direct labor hours would be worked. At year-end, Anthony, the company’s founder and CEO, gives you the following information regarding Oberti’s operations.1.The beginning balances in the inventory accounts were: Raw Materials Inventory $8,000 Work in Process Inventory $26,000 Finished Goods Inventory $32,0002.During the year, the company purchased raw materials costing $97,000. All purchases were made on account.3.The production department requisitioned $100,000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials.4.The company used 21,000 direct labor hours at a cost of $14 per hour during the year (credit Wages Payable).5.The company used 6,500 indirect labor hours at a cost of $10 per hour (credit Wages Payable).6.The company paid $178,000 for insurance, utilities, and property taxes on the factory.7.The company recorded factory depreciation of $40,000.8.The company applied manufacturing overhead to inventory based on the 21,000 labor hours actually worked during the year.9.Products costing $665,000 were completed during the year and transferred to the Finished Goods Inventory.10.During the year, the company sold products costing a total of $672,000.11.The company closes under- and overapplied overhead to Cost of Goods Sold. ### Journal Entries for Accounting TransactionsThis section details the steps to prepare journal entries for various transactions. Below are specific entries and their corresponding debit and credit amounts.---#### Transaction 1: Raw Materials Purchase**Account Titles and Explanation**- **Debit:** - Raw Materials Inventory: 8000- **Credit:** - (No entry required for this example)**Explanation:**This entry is made to record the purchase of raw materials.---#### Transaction 2: Additional Expenses**Account Titles and Explanation**- **Debit:** - (No entry required for this example)- **Credit:** - (No specific account title shown): 97000 (This section likely refers to an additional credit transaction related to expenses, though the specific account is not provided.)---#### Transaction 3: Use of Materials in Production**Account Titles and Explanation**- **Debit:** - (No specific account titles indicated)- **Credit:** - (No specific account titles indicated)**Explanation:**To record the use of direct and indirect materials in production.---#### Transaction 4: Direct Labor Payroll**Account Titles and Explanation**- **Debit:** - Work In Process Inventory- **Credit:** - Wages Payable**Explanation:**To record the direct labor payroll.---For each transaction listed, ensure that the debit and credit amounts are entered according to the accounts specified. Transactions should be posted in the order presented in the problem. ### Example Journal Entry for Inventory AccountingIn an example journal entry for inventory accounting, certain transactions are recorded involving inventories and manufacturing overhead. Below are the details of such transactions illustrated in the provided sample:---1. **Applying Manufacturing Overhead to Work in Process Inventory** **Entry Description:** - Work in Process Inventory: [Amount] - Manufacturing Overhead: [Amount] This entry records the application of manufacturing overhead to the work in process inventory during production.---2. **Transferring Completed Products to Finished Goods Inventory** **Entry Description:** - Finished Goods Inventory: 665,000 - [Account Not Specified]: 665,000 This entry records the transfer of completed products from work in process inventory to finished goods inventory.---### Graphical or Diagram ExplanationWhile no graphical representations or diagrams are provided in this example, the layout can be described:- **Accounts** are listed in a series of rows, with `Work in Process Inventory`, `Manufacturing Overhead`, and `Finished Goods Inventory`.- **Amounts** are indicated in corresponding boxes adjacent to the account titles, meant to show the changes in balance for each account due to the transactions described.Such journal entries are crucial for maintaining accurate accounting records and reflecting the cost flows in a manufacturing environment.

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Oberti Guitar Company makes high-quality customized guitars. Oberti uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $300,000 and that 20,000 direct labor hours would be worked. At year-end, Anthony, the company’s founder and CEO, gives you the following information regarding Oberti’s operations. 1. The beginning balances in the inventory accounts were: Raw Materials Inventory $8,000 Work in Process Inventory $26,000 Finished Goods Inventory $32,000 2. During the year, the company purchased raw materials costing $97,000. All purchases were made on account. 3. The production department requisitioned $100,000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials. 4. The company used 21,000 direct labor hours at a cost of $14 per hour during the year (credit Wages Payable). 5. The company used 6,500 indirect labor hours at a cost of $10 per hour (credit Wages Payable). 6. The company paid $178,000 for insurance, utilities, and property taxes on the factory. 7. The company recorded factory depreciation of $40,000. 8. The company applied manufacturing overhead to inventory based on the 21,000 labor hours actually worked during the year. 9. Products costing $665,000 were completed during the year and transferred to the Finished Goods Inventory. 10. During the year, the company sold products costing a total of $672,000. 11. The company closes under- and overapplied overhead to Cost of Goods Sold.

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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I am a littl lost with the blanks in red (attached) thank you for any help

Oberti Guitar Company makes high-quality customized guitars. Oberti uses a job order costing system. Because the guitars are handmade, the company applies overhead based on direct labor hours. At the beginning of the year, the company estimated that total manufacturing overhead costs would be $300,000 and that 20,000 direct labor hours would be worked. At year-end, Anthony, the company’s founder and CEO, gives you the following information regarding Oberti’s operations.

The beginning balances in the inventory accounts were:

	Raw Materials Inventory		$8,000
	Work in Process Inventory		$26,000
	Finished Goods Inventory		$32,000

During the year, the company purchased raw materials costing $97,000. All purchases were made on account.

The production department requisitioned $100,000 of raw materials for use in production. Of those, 70% were direct materials and 30% were indirect materials.

The company used 21,000 direct labor hours at a cost of $14 per hour during the year (credit Wages Payable).

The company used 6,500 indirect labor hours at a cost of $10 per hour (credit Wages Payable).

The company paid $178,000 for insurance, utilities, and property taxes on the factory.

The company recorded factory depreciation of $40,000.

The company applied manufacturing overhead to inventory based on the 21,000 labor hours actually worked during the year.

Products costing $665,000 were completed during the year and transferred to the Finished Goods Inventory.

10.

During the year, the company sold products costing a total of $672,000.

11.

The company closes under- and overapplied overhead to Cost of Goods Sold.

### Journal Entries for Accounting Transactions

This section details the steps to prepare journal entries for various transactions. Below are specific entries and their corresponding debit and credit amounts.

---

#### Transaction 1: Raw Materials Purchase

**Account Titles and Explanation**
- **Debit:**
- Raw Materials Inventory: 8000
- **Credit:**
- (No entry required for this example)

**Explanation:**
This entry is made to record the purchase of raw materials.

---

#### Transaction 2: Additional Expenses

**Account Titles and Explanation**
- **Debit:**
- (No entry required for this example)
- **Credit:**
- (No specific account title shown): 97000

(This section likely refers to an additional credit transaction related to expenses, though the specific account is not provided.)

---

#### Transaction 3: Use of Materials in Production

**Account Titles and Explanation**
- **Debit:**
- (No specific account titles indicated)
- **Credit:**
- (No specific account titles indicated)

**Explanation:**
To record the use of direct and indirect materials in production.

---

#### Transaction 4: Direct Labor Payroll

**Account Titles and Explanation**
- **Debit:**
- Work In Process Inventory
- **Credit:**
- Wages Payable

**Explanation:**
To record the direct labor payroll.

---

For each transaction listed, ensure that the debit and credit amounts are entered according to the accounts specified. Transactions should be posted in the order presented in the problem.

### Example Journal Entry for Inventory Accounting

In an example journal entry for inventory accounting, certain transactions are recorded involving inventories and manufacturing overhead. Below are the details of such transactions illustrated in the provided sample:

---

1. **Applying Manufacturing Overhead to Work in Process Inventory**

**Entry Description:**
- Work in Process Inventory: [Amount]
- Manufacturing Overhead: [Amount]

This entry records the application of manufacturing overhead to the work in process inventory during production.

---

2. **Transferring Completed Products to Finished Goods Inventory**

**Entry Description:**
- Finished Goods Inventory: 665,000
- [Account Not Specified]: 665,000

This entry records the transfer of completed products from work in process inventory to finished goods inventory.

---

### Graphical or Diagram Explanation

While no graphical representations or diagrams are provided in this example, the layout can be described:

- **Accounts** are listed in a series of rows, with `Work in Process Inventory`, `Manufacturing Overhead`, and `Finished Goods Inventory`.
- **Amounts** are indicated in corresponding boxes adjacent to the account titles, meant to show the changes in balance for each account due to the transactions described.

Such journal entries are crucial for maintaining accurate accounting records and reflecting the cost flows in a manufacturing environment.

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