Question

Jay Sports Equipment Company, Inc. incurred the following costs during 20x2.

Direct material used	$173,000
Direct labor	321,000
Manufacturing overhead applied	160,000

During 20x2, products costing $120,000 were finished, and products costing $132,000 were sold on account for $195,000. There were no purchases of raw material during the year. The beginning balances in the firm’s inventory accounts are as follows:

Raw material	$225,000
Work in process	16,000
Finished goods	30,000

Prepare T-accounts to show the flow of costs through the company’s manufacturing accounts during 20x2.

Prepare a partial balance sheet and a partial income statement to reflect the information given above.

Answer 1

Ans- T-accounts

Raw-Material Inventory

$225,000
	173,000
52,000

Wages Payable

321,000

Manufacturing Overhead

160,000

Sales Revenue

195,000

Accounts Receivable

195,000

Work in Process Inventory

16,000
173,000
321,000
160,000
	120,000
550,000

Finished Goods Inventory

30,000
120,000	132,000
18,000

Cost of goods sold

132,000

2- Jay Sports Equipment Company Inc.

Partial Balance Sheet

As at December 31, 20x2

Current Assets:-
Cash
Accounts Receivable
Inventory:
Raw Material	52,000
Work in Process	550,000
Finished goods	18,000

Jay Sports Equipment Company Inc.

Partial Income Statement

For the Year Ended December 31, 20x2

Sales revenue	$195,000
Less: Cost of goods sold	132,000
Gross Margin	$63,000

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