Question

Problem 5-18 Journal Entries; T-Accounts; Cost Flows [LO4, LO5, LO7]

Ravsten Company uses a job-order costing system. On January 1, the beginning of the current year, the company’s inventory balances were as follows:

Raw materials	$	20,000
Work in process	$	11,600
Finished goods	$	30,800

The company applies overhead cost to jobs on the basis of machine-hours. For the current year, the company estimated that it would work 36,800 machine-hours and incur $171,120 in manufacturing overhead cost. The following transactions were recorded for the year:

1. Raw materials were purchased on account: $216,000.
2. Raw materials were requisitioned for use in production: $198,000 (80% direct and 20% indirect).
3. The following costs were incurred for employee services:

Direct labour	$	166,400
Indirect labour	$	28,600
Sales commissions	$	38,400
Administrative salaries	$	83,200

4. Heat, power, and water costs were incurred in the factory: $45,600.
5. Prepaid insurance expired during the year: $14,000 (85% relates to factory operations, and 15% relates to selling and administrative activities).
6. Advertising costs were incurred, $54,000.
7. Depreciation was recorded for the year: $64,800 (90% relates to factory operations, and 10% relates to selling and administrative activities).
8. Manufacturing overhead cost was applied to production. The company recorded 41,600 machine-hours for the year.
9. Goods that cost $515,400 to manufacture according to their job cost sheets were transferred to the finished goods warehouse.
10. Sales for the year totalled $737,200 and were all on account. The total cost to manufacture these goods according to their job cost sheets was $508,800.

Required:

1. Prepare journal entries to record the transactions given above. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don’t forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account.

3-a. Is manufacturing overhead underapplied or overapplied for the year?

• Underapplied overhead

• Overapplied overhead

3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account. (Do not round intermediate calculations and round your final answers to 2 decimal places. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

4. Prepare an income statement for the year. (Round intermediate calculations to nearest whole number.)

I do not get #3 and #4 questions. Thank you in advance!

Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 1 1. Prepare journal entries to record the transactions given above. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) 10 points Answer is complete and correct. General Journal Credi No Transaction Debit 1 Raw 216,000 a materials Accounts payable 216.000 158,400 39.600 Work in process 2 Manufacturing overhead 198.000 Raw materials 166,400 Work in process Manufacturing overhead 28,600 Sales commissions expense 38.400 Administrative salaries expense 83,200 Salaries and wages payable 316,600 Manufacturing overhead 4 45,600 1 of 5 Next> Graw Prev Show all х‑ Am 50 Ch 5 Problems Saved Help Save & Exit Submit Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 1 737,200 10 Accounts receivable 737.200 Sales Cost of goods sold LZ 508.800 11 10 Finished gocds points 508.800 2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data t to enter the opening balances in your inventory accounts). Compute an ending balance in each account Answen complete and correct. Raw Materials Manufacturina Overhead Beg. Bal. Beg. Bal 20,000 216,000 198,000 b 39,600 193 440 H End. Bal. 38 000 28,600 45,600 11 900 1 of 5 Next> Graw Prev Show all wi хН 50 Ch 5 Problems Saved Help Save & Exit Submit Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 1 2. Prepare T-accounts for inventorles, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these T-accounts (don't forget to enter the opening balances in your inventory accounts). Compute an ending balance in each account. 10 points Answer complete and correct. Raw Materlals 20.000 Manufacturing Overhead Bea. Bal. Beg. Bal 216,000 38 000 198 000 b 39,600 28,600 45,600 193.440 h End. Bal. d 11.900 58,320 End. Bal. 420 Work in Process Cost of Goods Sold 11,600 C Beg. Bal Beq. Bal. 515.400 508.800C 158,400 b End, Bal. 508,800 ААП 193.440 1 of 5 Next> Graw Prev Show all wi хН 50 Ch 5 Problems Help Save & Exit Submit Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 1 Finished Goods 30,800 515.400 508.800 37 400 Beg Bal. 10 End. Bal. points 3-a. Is manufacturing overhead underapplied or overapplied for the year? Underapplied overhead Overapplied overheado 3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account (Do not round intermediate calculations and round your final answers to 2 decimal places. If no entry is required for transaction/event, select "No journal entry required" the first account field.) Next> Graw Prev 1 of 5 Show all wi хН 50 Ch 5 Problems Saved Help Save & Exit Submit Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 1 3-b. Prepare a journal entry to properly dispose of any balance in the Manufacturing Overhead account (Do not round intermediate calculations and round your final answers to 2 decimal places. If no entry is required for transaction/event, select "No journal entry required" the first account field.) 10 points Answer is complete but not entirely correct General Journal Credit No Event Debit 1 Manufacturing overhead 9.420.00 Work in process 24262 628 40 8.548 97 Finished goods Cost of goods sold 4. Prepare an income statement for the year. (Round intermediate calculations to nearest whole number.) Answer complete but not entirely correct DAVSTEN COMPANY 1 of 5 Next> Prev Grawe Show all wi хН 50 Ch 5 Problems Saved Help Save & Exit Submit Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion. Return to question 1 10 4. Prepare an income statement for the year. (Round intermediate calculations to nearest whole number.) points Answer complete but not entirely correct. RAVSTEN COMPANY Income Statement For the Year Ended December 31 $737,200 486,480 250.720 Sales Cost of goods sold Gross profit administrative s38.400 Sales commissions 83.200 Administrative salaries 2,100 Insurance expense 54,000 Advertising expenses Depreciation expense 6,480 184,180 Operating income 66.540 1 of 5 Next> Graw Prev Show all

Answer 1

Cost of Goods old 9420 7420 Manu faetoing Drechd cS Scanned with CamScanner

Income Slatem ent laleS 3,200 Cost of good Sold- (5o8,800 +1420 518 220 Grois Margin 18,980 Seifg and edministmlive Expenses Salary Expenle 83 200 Aduestng xpenle 54 o 00 TnSunan e Expense a100 6480 Depreciation Expente. ,45,80 Net opera kng ncome +3200 Cs Scanned with CamScanner