Question

Hi, would you help me with this problem below?

Blue Plate Construction organized in December and recorded the following transactions during its first month of operations:

1. Purchased materials on account for $400,000.

2. Used direct materials costing $100,000 on job no. 100

3. Used direct materials costing $150,000 on job no. 101

4. Used direct materials costing $30,000 on job no. 102

5. Applied the following direct labor costs to jobs: job no.100 $9,000: job no.101 $11,000: job no. 102 $5,000

6. Applied manufacturing overhead to all jobs at a rate of 300% of direct labor dollars.

7. Completed and transferred job no. 100 and job no. 101 to finished goods warehouse.

8. Sold job no.100 on account for $200,000.

9. Recorded and paid actual December manufacturing overhead costs of $78,000, cash.

10. Closed the manufacturing overhead account directly to Cost of Goods Sold.

My questions:

a. Record each of these transactions

b. Compute the amount at which Cost of Goods Sold is reported in the company's income statement for the month ended December 31.

c. Determine the inventory balances reported in the company's balance sheet dated December 31.

d. Was manufacturing overhead in December over applied, or was it underapplied? Explain.

Thanks Tanya

Answer 1

1)

Date	Account title	Debit	credit
1	Raw material inventory	400000
	Accounts payable		400000
2	work in process	100000
	Raw material inventory		100000
3	work in process	150000
	Raw material inventory		150000
4	work in process	30000
	Raw material inventory		30000
5	work in process	25000
	Factory labor (9000+11000+5000)		25000
6	work in process	75000
	Manufacturing overhead (25000*300%)		75000
7	Finished goods inventory	330000
	work in process (194000+136000)		330000
8	Accounts receivable	200000
	sales revenue		200000
	cost of goods sold	136000
	finished goods inventory		136000
10	manufacturing overhead	78000
	cash		78000
11	cost of goods sold	3000
	manufacturing overhead (78000-75000)		3000

**cost of Job 100:100000+9000+(9000*300%)= 136000

Job 101 :150000+11000+(11000*300%)= 194000

b)

Cost of goods sold :136000+3000= $ 139000

c)cost of job 102:30000+5000+(5000*300%) = 50000

Raw material inventory [0beginning+ 400000purchase- 280000used]	120000
work in process inventory (cost of job 102)	50000
Finished goods inventory (cost of job 101)	194000
Total	364000

d)

since actual overhead is more than applied overhead ,overhead was underapplied.