Problem 7-58 (Algo) Tracing Costs in a Job Company (LO 7-2, 3) The following transactions occurred in January at Apex Manufacturing, a custom parts supplier. Apex uses job costing. Purchased $54,600 in materials on account. Issued $2,400 in supplies from the materials inventory to the production department. Paid for the materials purchased in transaction (1). Issued $26,400 in direct materials to the production department. Incurred wage costs of $51,000, which were debited to Payroll, a temporary account. Of this amount, $14,400 was withheld for payroll taxes and credited to Payroll Taxes Payable. The remaining $36,600 was paid in cash to the employees. See transactions (6) and (7) for additional information about Payroll. Recognized $30,000 in fringe benefit costs, incurred as a result of the wages paid in (5). This $30,000 was debited to Payroll and credited to Fringe Benefits Payable. Analyzed the Payroll account and determined that 60 percent represented direct labor; 30 percent, indirect manufacturing labor; and 10 percent, administrative and marketing costs. Paid for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant totaling $33,300. Applied overhead on the basis of 175 percent of direct labor costs. Recognized depreciation of $18,150 on manufacturing property, plant, and equipment. Required: a. Prepare journal entries to record these transactions. b. The balances that appeared in the accounts of Apex Manufacturing are shown as follows. Beginning Ending Materials Inventory $ 56,925 — Work-in-Process Inventory 13,725 — Finished Goods Inventory 63,150 $ 51,600 Cost of Goods Sold — 103,275 Prepare T-accounts to show the flow of costs during the period

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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Problem 7-58 (Algo) Tracing Costs in a Job Company (LO 7-2, 3)

The following transactions occurred in January at Apex Manufacturing, a custom parts supplier. Apex uses job costing.

Purchased $54,600 in materials on account.
Issued $2,400 in supplies from the materials inventory to the production department.
Paid for the materials purchased in transaction (1).
Issued $26,400 in direct materials to the production department.
Incurred wage costs of $51,000, which were debited to Payroll, a temporary account. Of this amount, $14,400 was withheld for payroll taxes and credited to Payroll Taxes Payable. The remaining $36,600 was paid in cash to the employees. See transactions (6) and (7) for additional information about Payroll.
Recognized $30,000 in fringe benefit costs, incurred as a result of the wages paid in (5). This $30,000 was debited to Payroll and credited to Fringe Benefits Payable.
Analyzed the Payroll account and determined that 60 percent represented direct labor; 30 percent, indirect manufacturing labor; and 10 percent, administrative and marketing costs.
Paid for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant totaling $33,300.
Applied overhead on the basis of 175 percent of direct labor costs.
Recognized depreciation of $18,150 on manufacturing property, plant, and equipment.

Required:

a. Prepare journal entries to record these transactions.

b. The balances that appeared in the accounts of Apex Manufacturing are shown as follows.

	Beginning	Ending
Materials Inventory	$	56,925		—
Work-in-Process Inventory		13,725		—
Finished Goods Inventory		63,150	$	51,600
Cost of Goods Sold		—		103,275

Prepare T-accounts to show the flow of costs during the period.

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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