The following were the inventory balances on 1/1/17: Raw Materials Work In Process Finished Goods | $65,000 $60,000 $84,000 The following manufacturing activity occurred during the month of January: a. Purchased raw materials inventory of $210,000 on account. b. Kate requisitioned materials to complete various jobs: • Direct materials $224,000 Indirect materíals $39,000 c. Time cards and payroll records indicate the following factory wages and salaries incurred during the month: • Assembly-line workers. $240,000 • Supervisors. • Maintenance workers. • Security. 45,000 27,000 25,000 d. The following were other factory related costs: • Depreciation on equipment.$ 42,000 • Building rent. • Insurance. • Utilities. 30,000 18,000 66,000 e. Manufacturing overhead was applied using a rate of 125% of direct labor costs. f. Goods costing $775,000 were completed during the month. & Goods costing $802,000 were sold for $1,463,000. All sales were on credit. Required: 1. Prepare journal entries for all items a through g above. Assume items all sales and purchases were on account. 2. Prepare t-accounts for Raw materials, WIP, Finished Goods, Cost of Goods Sold and Manufacturing Overhead. Provide beginning balances and January activity in items a through g. 3. Prepare a schedule of Cost of Goods Manufactured and a Schedule of 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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Question

Hello, I need some assistance with required question 3 at bottom of the first document. I'm having trouble with the Schedule of Cost of Goods Sold. I attached the Journal Entry I did if it helps.

Job Order Costing Problem:
The following were the inventory balances on 1/1/17:
Raw Materials
Work In Process
Finished Goods
$65,000
$60,000
$84,000
The following manufacturing activity occurred during the month of January:
a. Purchased raw materials inventory of $210,000 on account.
b. Kate requisitioned materials to complete various jobs:
Direct materials $224,000
Indirect materials $39,000
c. Time cards and payroll records indicate the following factory wages and salaries incurred during
the month:
Assembly-line workers.
• Supervisors.
$240,000
45,000
Maintenance workers.
27,000
Security.
25,000
d. The following were other factory related costs:
Depreciation on equipment.$ 42,000
• Building rent.
30,000
Insurance.
18,000
Utilities.
66,000
e. Manufacturing overhead was applied using a rate of 125% of direct labor costs.
f. Goods costing $775,000 were completed during the month.
g. Goods costing $802,000 were sold for $1,463,000. All sales were on credit.
Required:
1. Prepare journal entries for all items a through g above.
on account.
Assume items all sales and purchases were
2. Prepare t-accounts for Raw materials, WIP, Finished Goods, Cost of Goods Sold and Manufacturing
Overhead. Provide beginning balances and January activity in items a through g.
3. Prepare a schedule of Cost of Goods Manufactured and a Schedule of Cost of Goods Sold.
Copyright 2017 Ruben Davila – all rights reserved. May not be posted or distributed without express
written consent.

Ref #
Accounts
Dr.
Cr.
Raw Materials Inventory
ACCOUNTS PAYABLE
A
210,000
210,000
B
WIP- DIRECT MATERIALS
224,000
RAW MATERIALS INVENTORY
224,000
WIP- MANUFACTURING OVERHEAD
39,000
RAW MATERIALS INVENTORY
39,000
WIP - ASSEMBLY LINE WORKER ( DIRECT LABOR)
SALARIES / WAGES PAYABLE
240,000
240,000
MANUFACTURING OVERHEAD- SUPERVISORS
45,000
SALARIES / WAGES PAYABLE
MANUFACTURING OVERHEAD- MAINTENANCE WORKERS
45,000
27,000
SALARIES / WAGES PAYABLE
MANUFACTURING OVERHEAD- SECURITY
27,000
25,000
SALARIES / WAGES PAYABLE
25,000
DEPRECIATION ON EQUIPMENT
42,000
ACCUMULATED DEPRECIATION
42,000
BUILDING RENT
30,000
PREPAID BUILDING RENT
30,000
INSURANCE
18.000
PREPAID INSURANCE
18,000
UTILITIES
66,000
ACCOUNTS PAYBLE
60,000
E
WIP - MANUFACTURING OVERHEAD - APPLIED
300,000
MANUFACTURING OVERHEAD - APPLIED
300,000
FINISHED GOODS
775,000
WORK IN PROCESS
775,000
G
COST OF GOODS SOLD
802,000
FINISHED GOODS INVENTORY
802,000
ACCOUNTS RECEIVABLE
SALES REVENUE
1,463,000
1,463,000

Expert Solution

Step 1

The schedule of cost of goods sold presents the cost of all the products which have been sold by the firm. It includes the beginning inventory of finished goods, cost of goods manufactured and ending inventory of finished goods.

Since the overhead is applied on a predetermined overhead rate, it may mismatch with the actual overhead. Therefore, the underapplied or overapplied overhead must be adjusted in the cost of goods sold.