Forest Components makes aircraft parts. The following transactions occurred in July. 1. Purchased $16,830 of materials on account. 2. Issued $16,890 in direct materials to the production department. 3. Issued $1,260 of supplies from the materials inventory. 4. Paid for the materials purchased in transaction (1) using cash. 5. Returned $2,040 of the materials issued to production in (2) to the materials inventory. 6. Direct labor employees earned $31,100, which was paid in cash. 7. Purchased miscellaneous items for the manufacturing plant for $17,240 on account. 8. Recognized depreciation on manufacturing plant of $35,500. 9. Applied manufacturing overhead for the month. Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $434,500. Estimated overhead for the year was $399,740. The following balances appeared in the inventory accounts of Forest Components for July. Beginning Ending ? $12,530 10,600 Materials Inventory Work-in-Process Inventory Finished Goods Inventory Cost of Goods Sold ? $2,780 ? 7,070 73,900
Forest Components makes aircraft parts. The following transactions occurred in July. 1. Purchased $16,830 of materials on account. 2. Issued $16,890 in direct materials to the production department. 3. Issued $1,260 of supplies from the materials inventory. 4. Paid for the materials purchased in transaction (1) using cash. 5. Returned $2,040 of the materials issued to production in (2) to the materials inventory. 6. Direct labor employees earned $31,100, which was paid in cash. 7. Purchased miscellaneous items for the manufacturing plant for $17,240 on account. 8. Recognized depreciation on manufacturing plant of $35,500. 9. Applied manufacturing overhead for the month. Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $434,500. Estimated overhead for the year was $399,740. The following balances appeared in the inventory accounts of Forest Components for July. Beginning Ending ? $12,530 10,600 Materials Inventory Work-in-Process Inventory Finished Goods Inventory Cost of Goods Sold ? $2,780 ? 7,070 73,900
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter2: Basic Managerial Accounting Concepts
Section: Chapter Questions
Problem 53P: Cost of Direct Materials, Cost of Goods Manufactured, Cost of Goods Sold Bisby Company manufactures...
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b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.
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