Job Order Costing : The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method. Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts. Accounting rules for journal entries: To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains. To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains. To determine: The predetermined overhead rate.

Question

QUESTION 1 Rentokil Limited issued a 10-year bond on January 1 2011. It pays interest on January1. The below amortization schedule and interest schedule reflects this. Its year end isDecember 31. Requirements: a) Indicate whether the bonds were issued at a premium or a discount and explainhow you came to your decision. b) Compute the stated interest rate and the effective interest rate c) Prepare the journal entries for the following years:I. 2011, 2012 & 2018.

Answer 1

Question

Chapter 20, Problem 20.1AP

(a)

To determine

Job Order Costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The predetermined overhead rate.

(b)

To determine

To prepare: The job cost sheets.

(c)

To determine

To prepare: The journal entries to record the transactions.

(d)

To determine

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

(e)

To determine

To prepare: The job cost sheets showing the total and the entry to record the transaction.

(f)

To determine

To prepare: The entry to record the transaction of sale of any job.

(g)

To determine

To prepare: The T-account for the finished goods inventory.

(h)

To determine

The under or over applied overhead.

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QUESTION 1 Rentokil Limited issued a 10-year bond on January 1 2011. It pays interest on January1. The below amortization schedule and interest schedule reflects this. Its year end isDecember 31. Requirements: a) Indicate whether the bonds were issued at a premium or a discount and explainhow you came to your decision. b) Compute the stated interest rate and the effective interest rate c) Prepare the journal entries for the following years:I. 2011, 2012 & 2018.

Blueberry Corp. plans to tighten its credit policy. The new policy will decrease the average number of days in collection from 65 to 45, as well as reduce the ratio of credit sales to total revenue from 80% to 70%. The company estimates that projected sales will be 8% less if the proposed new credit policy is implemented. The firm’s short-term interest cost is 8%. Projected sales for the coming year are $32,000,000. Assuming a 360-day year, calculate the dollar impact on accounts receivable of Blueberry Corp. of this proposed change in credit policy.

Crane Company accumulates the following data concerning a mixed cost, using units produced as the activity level. Units Produced Total Cost March 9,970 $20,005 April 8,930 18,154 May 10,500 20,538 June 8,710 17,674 July 9,370 18,604 Using the information from your answer to above part, write the cost equation. (Round per unit produced answer to 2 decimal places (e.g., 2.25).) +A +$ per unit produced × Total cost

Answer 2

Question

Chapter 20, Problem 20.1AP

(a)

To determine

Job Order Costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The predetermined overhead rate.

(b)

To determine

To prepare: The job cost sheets.

(c)

To determine

To prepare: The journal entries to record the transactions.

(d)

To determine

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

(e)

To determine

To prepare: The job cost sheets showing the total and the entry to record the transaction.

(f)

To determine

To prepare: The entry to record the transaction of sale of any job.

(g)

To determine

To prepare: The T-account for the finished goods inventory.

(h)

To determine

The under or over applied overhead.

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Answer 3

Question

Chapter 20, Problem 20.1AP

(a)

To determine

Job Order Costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The predetermined overhead rate.

(b)

To determine

To prepare: The job cost sheets.

(c)

To determine

To prepare: The journal entries to record the transactions.

(d)

To determine

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

(e)

To determine

To prepare: The job cost sheets showing the total and the entry to record the transaction.

(f)

To determine

To prepare: The entry to record the transaction of sale of any job.

(g)

To determine

To prepare: The T-account for the finished goods inventory.

(h)

To determine

The under or over applied overhead.

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Answer 4

Question

Chapter 20, Problem 20.1AP

(a)

To determine

Job Order Costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The predetermined overhead rate.

(b)

To determine

To prepare: The job cost sheets.

(c)

To determine

To prepare: The journal entries to record the transactions.

(d)

To determine

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

(e)

To determine

To prepare: The job cost sheets showing the total and the entry to record the transaction.

(f)

To determine

To prepare: The entry to record the transaction of sale of any job.

(g)

To determine

To prepare: The T-account for the finished goods inventory.

(h)

To determine

The under or over applied overhead.

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Answer 5

Chapter 20, Problem 20.1AP

(a)

To determine

Job Order Costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The predetermined overhead rate.

(b)

To determine

To prepare: The job cost sheets.

(c)

To determine

To prepare: The journal entries to record the transactions.

(d)

To determine

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

(e)

To determine

To prepare: The job cost sheets showing the total and the entry to record the transaction.

(f)

To determine

To prepare: The entry to record the transaction of sale of any job.

(g)

To determine

To prepare: The T-account for the finished goods inventory.

(h)

To determine

The under or over applied overhead.

Answer 6

Chapter 20, Problem 20.1AP

(a)

To determine

Job Order Costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The predetermined overhead rate.

Answer 7

Chapter 20, Problem 20.1AP

(a)

To determine

Job Order Costing: The job order costing is a method of cost accounting. Under this method, costs are given to each job and for each lot of goods. Each batch or each job has a different feature. The cost for each job is computed by using this method.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase the balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue, and gains.

To decrease the balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue, and gains.

To determine: The predetermined overhead rate.

Answer 8

(b)

To determine

To prepare: The job cost sheets.

Answer 9

(b)

To determine

To prepare: The job cost sheets.

Answer 10

(c)

To determine

To prepare: The journal entries to record the transactions.

Answer 11

(c)

To determine

To prepare: The journal entries to record the transactions.

Answer 12

(d)

To determine

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

Answer 13

(d)

To determine

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

Answer 14

(e)

To determine

To prepare: The job cost sheets showing the total and the entry to record the transaction.

Answer 15

(e)

To determine

To prepare: The job cost sheets showing the total and the entry to record the transaction.

Answer 16

(f)

To determine

To prepare: The entry to record the transaction of sale of any job.

Answer 17

(f)

To determine

To prepare: The entry to record the transaction of sale of any job.

Answer 18

(g)

To determine

To prepare: The T-account for the finished goods inventory.

Answer 19

(g)

To determine

To prepare: The T-account for the finished goods inventory.

Answer 20

(h)

To determine

The under or over applied overhead.

Answer 21

(h)

To determine

The under or over applied overhead.

Answer 22

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Ch. 20 - Prob. 1Q Ch. 20 - Prob. 2Q Ch. 20 - Prob. 3Q Ch. 20 - Prob. 4Q Ch. 20 - Prob. 5Q Ch. 20 - Prob. 6Q Ch. 20 - Prob. 7Q Ch. 20 - Prob. 8Q Ch. 20 - Prob. 9Q Ch. 20 - Prob. 10Q

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To prepare: The job cost sheets.

To prepare: The journal entries to record the transactions.

To prepare: The journal entries to record the transactions and posting of costs to the cost sheets.

To prepare: The job cost sheets showing the total and the entry to record the transaction.

To prepare: The entry to record the transaction of sale of any job.

To prepare: The T-account for the finished goods inventory.

The under or over applied overhead.

Chapter 20 Solutions