Use the information below to answer the following two questions: Ginseng Inc. uses a normal cost system to account for jobs it produces and closes out any over- or under-applied manufacturing overhead directly to Cost of Goods Sold at the end of each quarter. Beginning balances from the Balance Sheet on January 1 ar shown in the table below. The table uses the following abbreviations: A/P = Accounts Payable R/E = Retained Earnings Beg = Beginning Balance End = Ending Balance RM = Raw Materials Inventory WIP = Work in Process Inventory FG = Finished Goods Inventory MOH = Manufacturing Overhead PP&E = Property, Plant & Equipment A summary of transactions completed in the quarter are shown below in $1,000's: a. Raw materials purchased on account b. Raw materials used in production (75% were direct; the remainder indirect) c. Salaries & wages paid in cash (70% direct; 20% indirect; 10% selling & admin) d. Depreciation on PP&E (90% manufacturing; the remainder selling & admin) c. Factory utility expenses paid on account f. Advertising expenses paid in cash g. Manufacturing overhead applied to production h. Cost of goods manufactured i. Cash sales to customers j. Cost of goods sold (unadjusted) $ 22 100 50 $ 60 34 18 105 204 375 180 k. Underapplied or overapplied overhead closed entirely to Cost of Goods Sold ? To answer the following two questions, enter the numbers relevant for each calculation into the table below using positive numbers to designate increases to an account balance and negative numbers to designate decreases.
Use the information below to answer the following two questions: Ginseng Inc. uses a normal cost system to account for jobs it produces and closes out any over- or under-applied manufacturing overhead directly to Cost of Goods Sold at the end of each quarter. Beginning balances from the Balance Sheet on January 1 ar shown in the table below. The table uses the following abbreviations: A/P = Accounts Payable R/E = Retained Earnings Beg = Beginning Balance End = Ending Balance RM = Raw Materials Inventory WIP = Work in Process Inventory FG = Finished Goods Inventory MOH = Manufacturing Overhead PP&E = Property, Plant & Equipment A summary of transactions completed in the quarter are shown below in $1,000's: a. Raw materials purchased on account b. Raw materials used in production (75% were direct; the remainder indirect) c. Salaries & wages paid in cash (70% direct; 20% indirect; 10% selling & admin) d. Depreciation on PP&E (90% manufacturing; the remainder selling & admin) c. Factory utility expenses paid on account f. Advertising expenses paid in cash g. Manufacturing overhead applied to production h. Cost of goods manufactured i. Cash sales to customers j. Cost of goods sold (unadjusted) $ 22 100 50 $ 60 34 18 105 204 375 180 k. Underapplied or overapplied overhead closed entirely to Cost of Goods Sold ? To answer the following two questions, enter the numbers relevant for each calculation into the table below using positive numbers to designate increases to an account balance and negative numbers to designate decreases.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Use the information below to answer the following two questions:
Ginseng Inc. uses a normal cost system to account for jobs it produces and closes out any over- or under-applied manufacturing
overhead directly to Cost of Goods Sold at the end of each quarter. Beginning balances from the Balance Sheet on January 1 are
shown in the table below. The table uses the following abbreviations:
RM = Raw Materials Inventory
A/P = Accounts Payable
R/E = Retained Earnings
WIP = Work in Process Inventory
FG = Finished Goods Inventory
Beg = Beginning Balance
End = Ending Balance
MOH = Manufacturing Overhead
PP&E = Property, Plant & Equipment
A summary of transactions completed in the quarter are shown below in $1,000's:
Raw materials purchased on account
b. Raw materials used in production (75% were direct; the remainder indirect)
a.
22
24
100
Salaries & wages paid in cash (70% direct; 20% indirect; 10% selling & admin)
d. Depreciation on PP&E (90% manufacturing; the remainder selling & admin)
e. Factory utility expenses paid on account
f. Advertising expenses paid in cash
g. Manufacturing overhead applied to production
c.
$
50
60
34
18
S
105
204
h. Cost of goods manufactured
i. Cash sales to customers
j. Cost of goods sold (unadjusted)
375
180
k.
Underapplied or overapplied overhead closed entirely to Cost of Goods Sold
?
To answer the following two questions, enter the numbers relevant for each calculation into the table below using positive
numbers to designate increases to an account balance and negative numbers to designate decreases.
Cash
RM
WIP
FG
МОН
PP&E
A/P R/E
Beg
$39
$89
$14
$19
$0
$120
$28 $253
a.
b.
с.
d.
e.
f.
g.
h.
i.
j.
k.
End
Expert Solution
Step 1 Introduction
The overhead applied would increase work in process and decrease overhead account balance.
The selling and administrative expenses would decrease the retained earnings of the business as these are treated as operating expenses.
The accumulated depreciation would decrease the value of fixed assets.
The underapplied overhead would be debited to cost of goods sold account.
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