Reference no: EM132566764

The following trial balance was taken from the records of Gibson Manufacturing Company at the beginning of Year 3:

Cash $9,430

Raw materials inventory 810

Work in process inventory 1,280

Finished goods inventory 2,110

Property, plant, and equipment 7,750

Accumulated depreciation $3,200

Common stock 8,000

Retained earnings 10,180

Total $21,380 $21,380

Transactions for the Accounting Period

1. Gibson purchased $6,100 of direct raw materials and $360 of indirect raw materials on account. The indirect materials are capitalized in the Production Supplies account. Materials requisitions showed that $5,800 of direct raw materials had been used for production during the period. The use of indirect materials is determined at the end of the year by physically counting the supplies on hand.
2. By the end of the year, $5,300 of the accounts payable had been paid in cash.
3. During the year, direct labor amounted to 950 hours recorded in the Wages Payable account at $10.10 per hour.
4. By the end of the year, $8,695 of wages payable had been paid in cash.
5. At the beginning of the year, the company expected overhead cost for the period to be $6,000 and 1,000 direct labor hours to be worked. Overhead is allocated based on direct labor hours, which, as indicated in Event 3, amounted to 950 for the year.
6. Selling and administrative expenses for the year amounted to $940 paid in cash.
7. Utilities and rent for production facilities amounted to $4,740 paid in cash.
8. Depreciation on the plant and equipment used in production amounted to $1,510.
9. There was $11,200 of goods completed during the year.
10. There was $12,150 of finished goods inventory sold for $18,600 cash.
11. A count of the production supplies revealed a balance of $89 on hand at the end of the year.
12. Any over- or underapplied overhead is considered to be insignificant.

Required

Question 1: Prepare T-accounts with the beginning balances shown in the preceding list and record all transactions for the year including closing entries in the T-accounts.

Question 2: Prepare schedule of cost of goods manufactured and sold, an income statement, and a balance sheet.