Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
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Chapter 2, Problem 10P
1.
To determine
Journalize the transactions and provide impact of each transaction in a table format.
2.
To determine
Compute the material inventory balance and the cost of material used in production.
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The following transactions were incurred by Mooney Fabricators during January, the first month of its fiscal year.
(Click the icon to view the transactions.)
Requirements
1. Record the proper journal entry for each transaction.
2. By the end of January, was manufacturing overhead overallocated or underallocated? By how much?
Date
TWIT
b. $178,000 of materials was used in production; of this amount, $146,000
Journal Entry
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Accounts
b. Work in Process Inventory
Manufacturing Overhead
Raw Materials Inventory
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a. $205,000 of materials was purchased on account.
b. $178,000 of materials was used in production; of this amount, $146,000 was
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C. Manufacturing labor and salaries for the month totaled $225,000. A total of
$215,000 of manufacturing labor and salaries was traced to specific jobs, and
the remainder was indirect labor used in the factory.
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f.
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Zang Co. manufactures its products in a continuous process involving two departments, Machining and Assembly. Prepare journal entries to record the following transactions related to production during June:
If an amount box does not require an entry, leave it blank.
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b. Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials; Assembly, $4,900 indirect materials.
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Puddleby Company had the following transactions in October:
(Click the icon to view the transactions.)
Prepare the journal entries for Puddleby Company. (Record debits first, then credits. Exclude explanations from any
journal entries.)
1. Purchased raw materials on account, $75,000
Used materials in production: $28,000 in the Mixing Department; $7,000 in the Packaging
2. Department; $1,100 in indirect materials
Incurred labor costs: $8,500 in the Mixing Department; $5,600 in the Packaging
3. Department; $2,400 in indirect labor
Incurred manufacturing overhead costs: $5,500 in machinery depreciation; paid $3,000 for
4. rent and $1,750 for utilities
1. Purchased raw materials on account, $75,000
Date
Accounts
Debit
Credit
Chapter 2 Solutions
Principles of Cost Accounting
Ch. 2 - What are the two major objectives of materials...Ch. 2 - Prob. 2QCh. 2 - What factors should management consider when...Ch. 2 - Prob. 4QCh. 2 - What kind of information and data are needed to...Ch. 2 - How would you define the term economic order...Ch. 2 - What kind of information and data are needed to...Ch. 2 - What factors should be considered when determining...Ch. 2 - Prob. 9QCh. 2 - Prob. 10Q
Ch. 2 - Prob. 11QCh. 2 - Proper authorization is required before orders for...Ch. 2 - Prob. 13QCh. 2 - Prob. 14QCh. 2 - Prob. 15QCh. 2 - Prob. 16QCh. 2 - Prob. 17QCh. 2 - Normally, a manufacturer maintains an accounting...Ch. 2 - Prob. 19QCh. 2 - Why do companies adopt the LIFO method of...Ch. 2 - Prob. 21QCh. 2 - Prob. 22QCh. 2 - Prob. 23QCh. 2 - Prob. 24QCh. 2 - Prob. 25QCh. 2 - Prob. 26QCh. 2 - Prob. 27QCh. 2 - Prob. 28QCh. 2 - A manufacturing process may produce a considerable...Ch. 2 - After a product is inspected, some units may be...Ch. 2 - Order Point Pershing, Inc. expects daily usage of...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Economic order quantity; order cost; carrying cost...Ch. 2 - Journalizing materials requisitions Penrose...Ch. 2 - Recording materials transactions Prepare a journal...Ch. 2 - PurrChems raw materials records contained the...Ch. 2 - Using first-in, first-out perpetual inventory...Ch. 2 - LIFO costing Using last-in, first-out perpetual...Ch. 2 - Using the weighted average method of perpetual...Ch. 2 - Prob. 10ECh. 2 - Renfro, Inc. was franchised on January 1, 2016. At...Ch. 2 - Recording materials transactions Craig Products...Ch. 2 - Recording materials transactions Broadwell...Ch. 2 - JIT and cost control Matsui Industries produces...Ch. 2 - Kenkel, Ltd. uses backflush costing to account for...Ch. 2 - For E2-15, prepare any journal entries that would...Ch. 2 - Davis Co. uses backflush costing to account for...Ch. 2 - For E2-17, prepare any journal entries that would...Ch. 2 - A machine shop manufactures a stainless steel part...Ch. 2 - Spoiled work Roger Company manufactures tennis...Ch. 2 - Defective work Herbert Electronics manufactures an...Ch. 2 - Perry Co. predicts it will use 25,000 units of...Ch. 2 - Prob. 2PCh. 2 - Economic order quantity; tabular computation Lopez...Ch. 2 - In P2-3, assume that the company desires a safety...Ch. 2 - Inventory costing methods The purchases and issues...Ch. 2 - Inventory costing methods The following...Ch. 2 - Terrills Transmissions uses a job order cost...Ch. 2 - Prob. 8PCh. 2 - Tuscany Products, Inc. uses a job order cost...Ch. 2 - Prob. 10PCh. 2 - JIT and cost control Langray, Ltd. produces 50,000...Ch. 2 - Backflush costing Russell Corp. uses backflush...Ch. 2 - Webster Company uses backflush costing to account...Ch. 2 - An examination of Buckhorn Fabricators records...Ch. 2 - One of the tennis rackets that Ace Sporting Goods...Ch. 2 - Lloyd Industries manufactures electrical equipment...Ch. 2 - Review Problem for Chapters 1 and 2 UltraLift...Ch. 2 - Financial and Nonfinancial Aspects of Changing to...Ch. 2 - Prob. 2MC
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- The following transactions were incurred by Augustine Fabricators during January, the first month of its fiscal year. Requirements: Record the proper journal entry for each transaction. $205,000 of materials was purchased on account. $158,000 of materials was used in production; of this amount, $155,000 was used on specific jobs. Manufacturing labor and salaries for the month totaled $250,000. $215,000 of the total manufacturing labor and salaries was traced to specific jobs, and the remainder was indirect labor used in the factory. The company recorded $19,000 of depreciation on the plant and plant equipment. The company also received a plant utility bill for $10,000 which will be paid at a later date. $62,000 of manufacturing overhead was allocated to specific jobs. By the end of January, was manufacturing overhead overallocated or underallocated? By how much?arrow_forwardIn January, Cullumber Company requisitions raw materials for production as follows: Job 1 $1,200, Job 2 $1,440, Job 3 $800, and general factory use $720. Prepare a summary journal entry to record raw materials used. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 31 Debit Creditarrow_forwardDuring January, Dream House Builders, Inc. incurred $550 of actual indirect materials costs, as supported by materials requisitions. Complete the following journal entry by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.arrow_forward
- Columbine Company makes artificial flowers and reports the following data for the month: Journalize the entries relating to materials and labor. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Purchases of materials, on account $48,000 Materials requisitions: Direct materials 39,500 Indirect materials 300 Labor incurred (not yet paid): Direct labor 27,600 Indirect labor 1,940arrow_forwardChrome Solutions Company manufactures special chromed parts made to the order and specifications of the customer. It has two production departments, Stamping and Plating, and two service departments, Power and Maintenance. In any production department, the job in process is wholly completed before the next job is started. The company operates on a fiscal year, which ends September 30. Following is the post-closing trial balance as of September 30: Additional information: The balance of the materials account represents the following: The company uses the FIFO method of accounting for all inventories. Material A is used in the Stamping Department, and materials B and C are used in the Plating Department. The balance of the work in process account represents the following costs that are applicable to Job 905. (The customer’s order is for 1,000 units of the finished product.) The finished goods account reflects the cost of Job 803, which was finished at the end of the preceding month and is awaiting delivery orders from the customer. At the beginning of the year, factory overhead application rates were based on the following data: In October, the following transactions were recorded: Purchased the following materials and supplies on account: The following materials were issued to the factory: Customers’ orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively. Factory wages and office, sales, and administrative salaries are paid at the end of each month. (Assume FICA and federal income tax rates of 8% and 10%, respectively.) Record the company’s liability for state and federal unemployment taxes. (Assume rates of 4% and 1%, respectively, and that none of the employees had reached the $8,000 limit.) Record the payroll distribution for October. Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300. Miscellaneous factory overhead incurred during October totaled $4,230. Miscellaneous selling and administrative expenses were $1,500. These items as well as the FICA tax and federal income tax withheld for September were paid. (See account balances on the post-closing trial balance for September 30.) Annual depreciation on plant assets is calculated using the following rates (round to nearest dollar): Factory buildings–5% Machinery and equipment–20% Office equipment–20% The balance of the prepaid insurance account represents a three-year premium for a fire insurance policy covering the factory building and machinery. It was paid on the last day of the preceding month and became effective on October 1. The summary of factory overhead prepared from the factory overhead ledger is reproduced here: The total expenses of the Maintenance Department are distributed on the basis of floor space occupied by the Power Department (8,820 sq ft), Stamping Department (19,500 sq ft), and Plating Department (7,875 sq ft). The power department expenses are then allocated equally to the Stamping and Plating departments. After the actual factory overhead expenses have been distributed to the departmental accounts and the applied factory overhead has been recorded and posted, any balances in the departmental accounts are transferred to Under- and Overapplied Overhead. Jobs 905 and 1001 were finished during the month. Job 1002 is still in process at the end of the month. During the month, Jobs 803 and 905 were sold with a mark-on percentage of 50% on cost. Received $55,500 from customers in payment of their accounts. Checks were issued in the amount of $43,706 for payment of the payroll. Required: Set up the beginning trial balance in T-accounts. Prepare materials inventory ledger cards and enter October 1 balances. Prepare a Payroll Summary and Schedule of Earnings and Payroll Taxes for the month of October. Set up job cost sheets as needed. Record all transactions and related entries for October and post to T-accounts. Prepare a service department expense distribution worksheet for October. At the end of the month: Analyze the balance in the materials account, the work in process account, and the finished goods account. Prepare the statement of cost of goods manufactured for the month ended October 31.arrow_forwardThe post-closing trial balance of Custer Products, Inc. on April 30 is reproduced as follows: During May, the following transactions took place: a. Purchased raw materials at a cost of 45,000 and general factory supplies at a cost of 13,000 on account (recorded materials and supplies in the materials account). b. Issued raw materials to be used in production, costing 47,000, and miscellaneous factory supplies costing 15,000. c. Recorded the payroll and the payments to employees as follows: factory wages (including 12,000 indirect labor), 41,000; and selling and administrative salaries, 7,000. Additional account titles include Wages Payable and Payroll. (Ignore payroll withholdings and deductions.) d. Distributed the payroll in (c). e. Recognized depreciation for the month at an annual rate of 5% on the building, 10% on the factory equipment, and 20% on the office equipment. The sales and administrative staff uses approximately one-fifth of the building for its offices. f. Incurred other expenses totaling 11,000. One-fourth of this amount is allocable to the office function. g. Transferred total factory overhead costs to Work in Process. h. Completed and transferred goods with a total cost of 91,000 to the finished goods storeroom. i. Sold goods costing 188,000 for 362,000. (Assume that all sales were made on account.) j. Collected accounts receivable in the amount of 345,000. k. Paid accounts payable totaling 158,000. Required: 1. Prepare journal entries to record the transactions. 2. Set up T-accounts. Post the beginning trial balance and the journal entries prepared in (1) to the accounts and determine the balances in the accounts on May 31. 3. Prepare a statement of cost of goods manufactured, an income statement, and a balance sheet. (Round amounts to the nearest whole dollar.)arrow_forward
- Azzarelli, Corp makes picture frames and reports the following for the month of May: Description Amount Purchases of materials on account 53,330 Subcategory,Materials requisitions: Direct Materials 49,730 Indirect Materials 1,280 Subcategory,Labor costs incurred (not yet paid): Direct Materials 24,520 Indirect Materials 1,920 Journalize the entries at the end of the month to record the transactions relating to materials and labor.Journal Date Description Debit Credit May 31 May 31 May 31 May 31 May 31 May 31 May 31 May 31arrow_forwardZang Co. manufactures its products in a continuous process involving two departments, Machining and Assembly. Prepare journal entries to record the following transactions related to production during June: If an amount box does not require an entry, leave it blank. a. Materials purchased on account, $180,000. fill in the blank 402a09f7bfd8fe4_2 fill in the blank 402a09f7bfd8fe4_4 b. Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials; Assembly, $4,900 indirect materials. fill in the blank 155ee4fc1fa7016_2 fill in the blank 155ee4fc1fa7016_3 fill in the blank 155ee4fc1fa7016_5 fill in the blank 155ee4fc1fa7016_6 fill in the blank 155ee4fc1fa7016_8 fill in the blank 155ee4fc1fa7016_9 fill in the blank 155ee4fc1fa7016_11 fill in the blank 155ee4fc1fa7016_12 c. Direct labor used by Machining, $23,000; Assembly, $47,000. fill in the blank b536c9051fba057_2 fill in the blank…arrow_forwardSheridan Company installed a standard cost system on January 1. Selected transactions for the month of January are as follows. 1. 2. 3. 4. 5. Journalize the January transactions. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation 1. Purchased 16,000 units of raw materials on account at a cost of $3.20 per unit. Standard cost was $3.00 per unit. Issued 16,000 units of raw materials for jobs that required 15,690 standard units of raw materials. Incurred 16,000 actual hours of direct labor at an actual rate of $5.00 per hour. The standard rate is $5.40 per hour. (Credit Factory Wages Payable.) Performed 16,000 hours of direct labor on jobs when standard hours were 16,180. Applied overhead to jobs at the rate of 100% of direct labor cost for standard hours allowed. 2. 3. Debit Creditarrow_forward
- In January, Wildhorse Tool & Die requisitions raw materials for production as follows: Job 1 $910, Job 2 $1,500, Job 3 $810, and general factory use $710. Prepare a summary journal entry to record raw materials used. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 31 Debit Creditarrow_forwardIn January, Crane Company requisitions raw materials for production as follows: Job 1 $1,180, Job 2 $1,420, Job 3 $790, and general factory use $710. Prepare a summary journal entry to record raw materials used. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Jan. 31 Debit Creditarrow_forwardIvanhoe Company purchases $54,000 of raw materials on account, and it incurs $64,800 of factory labor costs. Supporting records show that (a) the Assembly Department used $25,920 of direct materials and $37,800 of direct labor, and (b) the Finishing Department used the remainder. Journalize the assignment of the costs to the processing departments on March 31. (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Mar. 31 31 (To record materials used) (To assign factory labor to production) Debit Creditarrow_forward
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