Chapter 17, Problem 38BP

Hero Stars produces stars for elementary teachers to reward their students. Hero Stars’ trial balance on June 1 follows:

June 1 balances in the subsidiary ledgers were as follows:

• Raw Materials Inventory subsidiary ledger: Paper, $5,000; indirect materials, $1,300
• Work-in-Process Inventory subsidiary ledger: Job 120, $39,400; Job 121, $0
• Finished Goods Inventory subsidiary ledger: Large Stars, $9,900; Small Stars, $11,400

June transactions are summarized as follows:

1. a. Collections on account, $141,000.
2. b. Selling and administrative expenses incurred and paid, $22,000.
3. c. Payments on account, $35,000.
4. d. Materials purchases on account: Paper, $25,500; indirect materials, $4,100.
5. e. Materials requisitioned and used in production:

1. f. Wages incurred during June, $40,000. Labor time records for the month: Job 120, $3,800; Job 121, $18,800; indirect labor, $17,400.
2. g. Wages paid in June include the balance in Wages Payable at May 31 plus $37,200 of wages incurred during June.
3. h. Depreciation on plant and equipment, $3,100.
4. i. Manufacturing overhead allocated at the predetermined overhead allocation rate of 50% of direct labor cost.
5. j. Jobs completed during the month: Job 120 with 700,000 Large Stars at a total cost of $45,900.
6. k. Sales on account: all of Job 120 for $104,000.
7. l. Adjusted for overallocated or underallocated manufacturing overhead.

Requirements

1. 1. Journalize the transactions for the company.
2. 2. Open T-accounts for the general ledger, the Raw Materials Inventory subsidiary ledger, the Work-in-Process Inventory subsidiary ledger, and the Finished Goods Inventory subsidiary ledger. Insert each account balance as given, and use the reference Bal. Post the journal entries to the T-accounts using the transaction letters as a reference.
3. 3. Prepare a trial balance at June 30, 2018.
4. 4. Use the Work-in-Process Inventory T-account to prepare a schedule of cost of goods manufactured for the month of June.
5. 5. Prepare an income statement for the month of June.