Question

Raw materials inventory Work in process inventory-Cutting Work in process inventory-Stitching Finished goods inventory Beginning Inventory $126,000 283,500 303,300 260,100 Ending Inventory $ 153,250 63,500 180,500 56,250 The following additional information describes the company's production activities for May. Direct materials Raw materials purchased on credit Direct materials used-Cutting Direct materials used-Stitching $ 145,000 27,750 0 Direct labor Direct labor-Cutting Direct labor-Stitching Total factory payroll paid (in cash) $ 27,600 110,400 197,800 Factory Overhead (Actual costs) Indirect materials used Indirect labor used Other overhead costs $ 90,000 59,800 71,000 Factory Overhead Rates Cutting (150% of direct materials used) Stitching (120% of direct labor used) Sales $1,216,000

Answer 1

	Record the purchase of material (on credit)
No.	Date	Account Titles and Explanation	Debit	Credit
1
May	Raw Materials Inventory	$145,000
31
	Accounts Payable		$145,000
	(For material purchased on account)
	Verification of ending balance in raw material inventory
	Beginning Raw Materials inventory	$126,000
	Add: Purchase of Raw Materials	$145,000
	Materials available for use	$271,000
	Less: Direct Materials used-Cutting	($27,750)
	Less: Direct Materials used-Stitching	0
	Less: Indirect Materials used	($90,000)
	Ending Raw Materials	$153,250
	Schedule of Cost of Goods Manufactured (Cutting)
	Direct Materials used in production	$27,750
	Direct Labour	$27,600
	Manufacturing Overhead	$41,625
	Total Manufacturing cost added during May		$96,975
	Add:Beginning work in process inventory		$283,500
	Total Cost of work in process		$380,475
	Less: Ending work in process inventory		($63,500)
	Cost of Goods Manufactured		$316,975
	Schedule of Cost of Goods Manufactured (Stitching)
	Direct Materials used in production	0
	Direct Labour	$110,400
	Manufacturing Overhead	$132,480
	Total Manufacturing cost added during May		$242,880
	Add:Beginning work in process inventory		$303,300
	Total Cost of work in process		$546,180
	Less: Ending work in process inventory		$180,500
	Cost of Goods Manufactured		$365,680
	Calculation of Cost of Goods Sold
	Beginning Finished goods inventory	$260,100
	Add: Cost of goods manufactured ($316,975 + $365,680)	$682,655
	Cost of goods available for sale	$942,755
	Less: Ending Finished goods inventory	($56,250)
	Unadjusted Cost of goods sold		$886,505
	Add: Underapplied Overhead		$46,695
	Adjusted Cost of goods sold		$933,200
	Calculation of Value of Gross Profit
	Sales	$1,216,000
	Less: Cost of goods sold	$933,200
	Gross Profit	$282,800