Cretae trial balance in t-accounts, Cost Accounting

Assignment Help:

Chrome-It, Inc., 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:

Cash                                                                                                                                        22,500

Accounts Receivable                                                                                                                  21,700

Finished Goods                                                                                                                           8,750

Work in Process                                                                                                                         3,600

Materials                                                                                                                                 15,000

Prepaid Insurance                                                                                                                      4,320

Factory Building                                                                                                                        64,000

Accum.Depr. - Factory Building                                                                                                  22,500

Machinery and Equipment                                                                                                          38,000

Accum.Depr. - Machinery and Equipment                                                                                    16,000

Office Equipment                                                                                                                      10,500

Accum.Depr. - Office Equipment                                                                                                  7,500

Accounts Payable                                                                                                                       2,500

FICA Tax payable                                                                                                                       3,120

Federal Unemployment Tax Payable                                                                                                364

State Unemployment Tax Payable                                                                                                 1,404

Employees Income Tax Payable                                                                                                    5,200

Capital Stock                                                                                                                             75,000

Retained Earnings                                                                                                                      54,782

                                                                                                                                         8,370 188,370

Additional information:

1.       The balance of the materials account represents the following:

Materials                                                 Units        Unit cost                      Total

A                                                             120         $25                         $3,000

B                                                             320           15                           4,800

C                                                             180           30                           5,400

Factory Supplies                                                                                      1,800

                                                                                                                $15,000

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.

2.   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.)

Direct materials                                   $1,500

Direct Labor                                          1,200

FOH                                                        900

                                                         $3,600

3.   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.

4.   At the beginning of the year, factory overhead application rates were based on the following data:

Stamping Dept.                 Plating Dept.

Estimated FOH for the year                         $145,000                              $115,500

Estimated direct labor hours for the year    29,000                                  6,000

In October, the following transactions were recorded:

a)      Purchased the following materials and supplies on account:

Material A                                                                           1,100 units @ $26

Material B                                                                               900 units @ $17

Material C                                                                               800 units @ $28

Factory Supplies                                                                                                               $3,200

b)      The following materials were issued to the factory:

                 Job 905                                                                            Job 1001               Job 1002

                Material A                                                                           600 units              400 units

                Material B                                                                           400 units              200 units

                Material C                                                                           200 units              400 units

                Factory Supplies.....$2,450

Customers' orders covered by Jobs 1001 and 1002 are for 1,000 and 500 units of finished product, respectively.

c)       Factory wages and office, sales, and administrative salaries are paid at the end of each month.  The following data, provided from an analysis of labor-time records and salary schedules, will be sufficient for the preparation of the entries to record the payroll.  (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.)  Record the payroll distribution for the month of October.

                               Stamping Dept.                                         Plating Dept.

                                Job 905                                                    100 hr. @ $9                    300 hr.  @ $11

                                Job 1001                                               1,200 hr. @ $9                    300 hr.  @ $11

                                Job 1002                                                  800 hr. @ $9

Wages of the supervisors, custodial personnel, etc., totaled $9,500; administrative salaries were $18,300.

d)      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.)

e)      Annual depreciation on the plan assets is calculated using the following rates:

Factory buildings - 5%

Machinery and Equipment - 20%

Office equipment - 20%

f)       The balance of the prepaid insurance account represents a 3-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.

g)      The summary of factory overhead prepared from the factory overhead ledger is reproduced here:    

Transaction        Account               Stamping            Plating Power         Maintenance              Total

a.       Factory Supplies               $ 940.00                $ 750.00    $260.00            $ 500.00                $2,450.00

b.      Indirect labor                     3,780.00               2,860.00      970.00            1,890.00                 9,500.00

c.       Payroll Taxes                      2,948.40               1,229.80      126.10               245.70                  4,550.00

d.      Miscellaneous                   1,692.00               1,410.00      752.00            376.00                4,230.00

e.      Depreciation                         360.00                    270.00       90.00             180.00                   900.00

f.        Insurance                                 48.00                      40.00       16.00                   16.00                     120.00

Total                                      $9,768.40          $6,559.80  $2,214.10     $3,207.70           $21,750.00

h)      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.

i)       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 Over-applied Overhead.

j)   Jobs 905 and 1001 were finished during the month.  Job 1002 is still in process at the end of the month.

k)   During the month, Jobs 803 and 905 were sold at a markup of 150% of cost.

l)   Received $55,500 from customers in payment of their accounts.

m)   Checks were issued in the amount of $43,706 for payment of the payroll.

Required:

1.  Set up the beginning trial balance in T-accounts

2.  Prepare materials inventory ledger cards and enter October 1 balances.

3.  Set up job cost sheets as needed.

4.  Record all transactions and related entries for the month of October and post to T-accounts.

5.  Prepare a service department expense distribution worksheet for October.

6.  At the end of the month:

a.  Analyze the balance in the materials account, the work in process account, and the finished goods account.

b.  Prepare the statement of cost of goods manufactured, income statement, and balance sheet for October 31.


Related Discussions:- Cretae trial balance in t-accounts

What are the variable costs, Normal 0 false false false ...

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4 Variable costs are those

Derive a truth table for a combinational logic circuit, Derive a truth tabl...

Derive a truth table for a combinational logic circuit that is to decode a 4-bit BCD representing a number in the range 0-9 and generate an appropriate 7-bit output to illuminate t

Objective type question, 1. Pardee Company plans to sell 12,000 units durin...

1. Pardee Company plans to sell 12,000 units during the month of August. If the company has 2,500 units on hand at the start of the month, and plans to have 2,000 units on hand at

Production needs in inventory for component a, Kenner company produces two ...

Kenner company produces two products: SR200 and TX500. Budged sales for four months are as follows; SR200 TX500 May 8,000 20,000 June 13,000 32,000 July 11,000 39,000 August 18,000

Assignment, what are the three of product costs in manufacturing company,di...

what are the three of product costs in manufacturing company,discuss in detail each and supporting with examples.

External sources of funds, These sources of funds are resources increased f...

These sources of funds are resources increased from outside the organization to augment funds availability for any of the utilizations to be discussed later. Generally, there are o

Purchase procedure, what is the procedure of purchase of materials in large...

what is the procedure of purchase of materials in large organisation?

What are the advantages and disadvantages of free float, Q. What are the ad...

Q. What are the advantages and disadvantages of free float? Advantages: It is one of the most suitable ER regimes for transitional countries that experience external shocks l

Cash flows statement , You have recently graduated from VU and are now work...

You have recently graduated from VU and are now working for a small accounting firm. The firm recently purchases MYOB software for internal use. Upon learning that you had learnt M

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd