### T-Account Preparation TutorialTo understand T-accounts and ledger entries, let’s go through an example. We will be preparing T-accounts for the following accounts: Direct Materials Inventory, Work in Process Inventory, Manufacturing Overhead Control, and Finished Goods Inventory. You are required to record the transactions as per the given details and compute the ending account balances. #### Beginning BalancesEnsure you begin with these initial balances on the respective accounts before posting the transactions:- **Direct Materials Inventory:** $36,000- **Work in Process Inventory:** $24,000- **Finished Goods Inventory:** $48,000#### Diagram ExplanationThe diagram presented consists of the template for preparing the T-accounts. Let’s explain the components within it.##### T-Account Template Layout1. **Manufacturing Overhead T-Account:** - There are multiple rows with two columns each. - Left column (Debit): Input fields (dropdowns and textboxes) for recording debits. - Right column (Credit): Input fields for recording credits. - The bottom row has a “Bal.” label, signifying the balance of the account.2. **Finished Goods Inventory T-Account:** - Similar layout as the overhead T-account. - Left column (Debit): Input fields for debits with initial balance shown as $48,000. - Right column (Credit): Input fields for credits. - Bottom rows again have “Bal.” labels for account balancing.### Instructions for T-Accounts1. **Manufacturing Overhead Account:** - Post all manufacturing overhead-related transactions in the left (debit) and right (credit) columns. - Sum up all debits and credits to compute the final balance.2. **Finished Goods Inventory Account:** - Begin with the initial balance of $48,000. - Post all relevant transactions as debits or credits. - Sum up the transactions to determine the ending balance.### Important Notes:- Ensure the sequence of transaction entry matches the order specified in the problem.- Calculate balances accurately by taking the initial balance into account, then adding debits and subtracting credits to find the final account balance.Utilizing the provided fields, ensure to account perfectly for all transactions affecting overhead and inventory, so the balances reflect accurate financial statements for review. This methodical approach is fundamental for understanding practical financial accounting and inventory management concepts. ### Journal Entries for Manufacturing Transactions#### 1. To Record Purchase of Direct Materials- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Direct Materials Inventory - $583,000 - **Credit:** Accounts Payable - $583,000#### 2. To Record Use of Indirect Materials in Production- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Manufacturing Overhead - $132,000 - **Credit:** Supplies Inventory - $132,000#### 3. To Record Use of Direct Materials in Production- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Work in Process Inventory - $569,000 - **Credit:** Direct Materials Inventory - $569,000#### 4. To Record Direct Labor Payroll- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Work in Process Inventory - $791,000 - **Credit:** Wages Payable - $791,000#### 5. To Record Actual Manufacturing Overhead- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Manufacturing Overhead - $690,000 - **Credit:** Accounts Payable - $690,000#### 6. To Record Applied Manufacturing Overhead- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Work in Process Inventory - $107,100 - **Credit:** Manufacturing Overhead - $107,100#### 7. To Record Transfer of Completed Goods to Finished Goods Inventory- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Finished Goods Inventory - $2,410,000 - **Credit:** Work in Process Inventory - $2,410,000#### 8. To Record Cost of Goods Sold for the Period- **Date:** [Date]- **Account Titles and Explanation** - **Debit:** Cost of Goods Sold - $2,398,000 - **Credit:** Finished Goods Inventory - $2,398,000### Diagram/Graph ExplanationThis chart is a sequence of journal entries demonstrating the transaction flow for materials, labor, and overhead in a manufacturing setting. It includes several steps:- **Direct Materials Purchase (Entry 1):

T accounts are the account wise ledgers in which financial transactions are posted.

Prepare T-accounts for the following accounts: Direct Materials Inventory, Work in Process Inventory, Manufacturing Overhead Control, and Finished Goods Inventory. Record the transactions from part (a) in the T-accounts and calculate ending account balances. Assume the following beginning account balances (Post entries in order presented in the problem):. Account Balance Direct Materials Inventory $36,000 Work in Process Inventory $24,000 Finished Goods Inventory $48,000 Manufacturing Overhead Bal. Finished Goods Inventory Bal 48000 Bl.

Prepare T-accounts for the following accounts: Direct Materials Inventory, Work in Process Inventory, Manufacturing Overhead Control, and Finished Goods Inventory. Record the transactions from part (a) in the T-accounts and calculate ending account balances. Assume the following beginning account balances (Post entries in order presented in the problem):. Account Balance Direct Materials Inventory $36,000 Work in Process Inventory $24,000 Finished Goods Inventory $48,000 Manufacturing Overhead Bal. Finished Goods Inventory Bal 48000 Bl.

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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