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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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.