Question

nment Print View Page 1 of Award: 5.00 points Froya Fabrikker AS of Bergen, Norwey is a wall company that manufactures specially heavy equipment for use in North Sea oil fields. The company uses a job-order costing system that applies manufacturing overhead cost to jobs on the basis of direct labor-hours predetermined overhead rate was based on a cost formula that estimated $350.000 of manufacturing overhead for an estimated location base of 1,000 direct labor-hours. The following transactions took place during the year a Raw materials purchased on account, $250,000 b. Raw materials used in production (all direct materials) $235,000 U b is incurred on account 09.000 (0related to factory operations, and the remainder related to selling and administrative activities) d Accrued salary and wage costs $ 280 000 Odbor (1075 hours Indirect labor Seling and strative salaries Maintenance costs incurred on account in the factory, 554000 1. Advertising costs incurred on account. $140.000 9 Depreciation was recorded for the year, 582.000 (75% related to factory equipment, and the remainder related to selling and administrative equipment h Rental cost incurred on account $107.000 (80% related to factory facilities, and the remainder related to selling and administrative facilities) i Manufacturing overhead cost was applied to obs. 2 Cost of goods manufactured for the year, 5870,000 k Sales for the year all on account ed 1.700.000. These goods om 1900 000 according to the job cost sheets The balances in the inventory accounts at the beginning of the year were Raw Matera Work in Process Finished Goods $ 40000 $31.000 $ 70.000 Required: 1. Prepare journal entries to record the preceding transactions 2. Post your entries to accounts (Don't forget to enter the beginning inventory balances above.) 3. Prepare a schedule of cost of goods manufactured 4. Prepare a journey to close any balance in the Manufacturing Overhead account to Cost of Goods Sold 48. Prepare a schedule of cost of goods sold 5. Prepare an income statement for the year

Answer 1

Answer-1:

No.	Account Title	Debit	Credit
a.	Raw material inventory	$ 250,000
	Account payable		$ 250,000
b.	Work in process inventory	235,000
	Raw material inventory		235,000
c.	Manufacturing overhead	62,100
	Utilities expense	6,900
	Account payable		69,000
d.	Work in process inventory	280,000
	Manufacturing overhead	100,000
	Salaries and wages expense	160,000
	Salaries and wages payable		540,000
e.	Manufacturing overhead	64,000
	Account payable		64000
f.	Advertising expense	146,000
	Account payable		146000
g.	Manufacturing overhead	61500
	Depreciation-equipment	20500
	Accumulated depreciation		82000
h.	Manufacturing overhead	85600
	Rent expense	21400
	Account payable		107000
i.	Work in process inventory	376,250
	Manufacturing overhead (350,000/1,000 × 1,075)		376,250
j.	Finished goods inventory	870,000
	Work in process inventory		870,000
k.	Account receivable	1,700,000
	Sales		1,700,000
k.	Cost of goods sold	900,000
	Finished goods inventory		900,000

Answer-2:

RM Inventory 40000 235000 250000 Account receivable 1700000 Acc. Depreciation 82000 376250 WIP Inventory 31000 870000 235000 280000 376250 Mfg OH 621001 100000 64000 61500 85600 Account payable 250000 69000 64000 146000 107000 55000 1700000 52250 3050 Utilities expense 6900 Sales revenue 1700000 Salaries & wages exp 160000 Salaries & wages payable 540000 Advertising expense 146000 636000 Depreciation-equipment 20500 -6900 20500 Rent exp 21400 FG Inventory 70000 900000 870000 COGS 900000 40000

Answer-3:

Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw materials inventory $ 40,000 Add: Purchase of raw materials 250,000 Total raw materials available 290,000 Less: Ending raw materials inventory 55,000 Raw materials used in production 235,000 Less: Indirect materials used Direct labour Manufacturing overhead applied to work in process Total manufacturing costs Add: Beginning WIP inventory $ 235,000 280,000 376,250 891,250 31,000 922,250 52,250 $ 870,000 Less: Ending WIP inventory Cost of goods manufactured

Answer-4:

3,050 Manufacturing overhead Cost of goods sold (to close over applied balance to COGS) 3,050