Question

J&B Guitars, Inc., a manufacturer of 6-string guitars, had the following activity during the calendar year 2017: make journal entries from the information below and then create a balance sheet and income statement based on the journal entries

1-Based on anticipated demand, the company planned for product sales to approximate $6,000,000 and Product Cost of approximately $2,500,000.

2-The company entered into a Line of Credit agreement with a bank totaling $5,000,000.

3-The company withdrew $4,000,000 from its line of credit and deposited the proceeds in its corporate checking accounting.

4-The company purchased $1,000,000 of raw materials on account.

5-The company requisitioned $500,000 of raw materials for production.

6-The company paid for Direct Labor totaling $750,000

7-The company applied Direct Overhead totaling $500,000

8-The company paid for Actual Overhead totaling $550,000

9-The company paid for the previously purchased $1,000,000 of raw materials (see 4. above).

10-The company paid for Selling and Administrative expenses totaling $1,400,000

11-The company calculated an underapplied overhead variance totaling $50,000 (see 6. and 7. above).

12-The company purchased a computer system for its just-in-time job process totaling $350,000 on account.

13-The company calculated depreciation expense related to the computer system totaling $70,000.

14-The company paid for Office Furniture for its accounting department totaling $100,000.

15-The company calculated depreciation expense related to the office furniture totaling $10,000.

16-The company completed products with a total cost of 1,750,000.

17-The company sold $1,000,000 of product on account at a 300% markup.

Answer 1

In the books of J & B Guitars Inc. :

Event / Transaction	Account Titles	Debit	Credit
		$	$
1.	No JE required	0	0
2.	No JE required	0	0
3.	Cash	4,000,000
	Bank Loan Payable		4,000,000
4.	Raw Materials Inventory	1,000,000
	Accounts Payable		1,000,000
5.	Work in Process Inventory	500,000
	Raw Materials Inventory		500,000
6.	Work in Process Inventory	750,000
	Cash		750,000
7.	Work in Process Inventory	500,000
	Overhead		500,000
8.	Overhead	550,000
	Cash		550,000
9.	Accounts Payable	1,000,000
	Cash		1,000,000
10.	Selling and Administrative Expenses	1,400,000
	Cash		1,400,000
11.	No JE required	0
12.	Computer Equipment	350,000
	Accounts Payable		350,000
13.	Overhead	70,000
	Accumulated Depreciation : Computer Equipment		70,000
14.	Office Furniture	100,000
	Cash		100,000
15.	Depreciation Expense	10,000
	Accumulated Depreciation : Office Furniture		10,000
16.	Finished Goods Inventory	1,750,000
	Work in Process Inventory		1,750,000
17.	Accounts Receivable	4,000,000
	Sales		4,000,000
17.	Cost of Goods Sold	1,050,000
	Finished Goods Inventory		1,000,000
	Overhead		50,000