Question

The following transactions occurred in April at Steve’s Cabinets, a custom cabinet firm:

Purchased $23,500 of materials on account.

Issued $1,550 of supplies from the materials inventory.

Purchased $12,700 of materials on account.

Paid for the materials purchased in transaction (1) using cash.

Issued $15,100 in direct materials to the production department.

Incurred direct labor costs of $27,500, which were credited to Wages Payable.

Paid $22,700 cash for utilities, power, equipment maintenance, and other miscellaneous items for the manufacturing plant.

Applied overhead on the basis of 125 percent of $27,500 direct labor costs.

Recognized depreciation on manufacturing property, plant, and equipment of $11,500.

The following balances appeared in the accounts of Steve’s Cabinets for April:
  

	Beginning			Ending
Materials Inventory	$	31,890			?
Work-in-Process Inventory		8,100			?
Finished Goods Inventory		34,700		$	29,390
Cost of Goods Sold					54,930

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Answer 1

Materials inventory					Work in process inventory
Beg bal	31,890				Beg.Bal	8,100
1	23,500	1,550	2		5)	15,100	48,510	Finished goods
3	12,700	15,100	5		6)	27,500
					8)	34,375
End bal	51,440
					end bal	36,565
Manufacturing overhead control					Applied manufacturing overhead
Beg bal	0				Beg bal	0
2)	1,550						34,375	8)
7)	22,700
9)	11,500
End bal	35750				end bal		29,700
Accounts payable					Cash
Beg bal	0				beg bal	0
4)	23,500	23,500	1)				23,500	4)
		12,700	3)				22,700	7)
End bal		12,700			End bal		46,200
Wages payable					Accumulated dep=-PP&E
Beg bal	0				Beg bal	0
		27,500	6)				11,500	9)
End bal		27,500			End bal		11,500
Finished goods inventory					Cost of goods sold
Beg bal	34,700				beg bal	0
WIP	48,510	53,280			finished go	53,280
End bal	29,930				End bal	53,280