Question

udio Escape Inc. manufactures audio speakers. Each speaker requires $125 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for December:

1	Speaker assembly cell, estimated costs:
2	Labor	$5,800.00
3	Depreciation	2,900.00
4	Supplies	2,100.00
5	Power	20,700.00
6	Total cell costs for the period	$31,500.00

The operating plan calls for 210 operating hours for the period. Each speaker requires 18 minutes of cell process time. The unit selling price for each speaker is $380. During December, the following transactions occurred:

Dec.	2	Purchased materials to produce 800 speaker units.
	6	Applied conversion costs to production of 780 speaker units.
	21	Completed and transferred 765 speaker units to finished goods.
	29	Sold 750 speaker units.

There were no inventories at the beginning of December.

	Required:
A.	Journalize the summary transactions for December. Refer to the Chart of Accounts for exact wording of account titles.
B.	Determine the ending balance for raw and in process inventory and finished goods inventory.

CHART OF ACCOUNTS

Audio Escape Inc.

General Ledger

ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 150 Raw and In Process Inventory 151 Finished Goods Inventory 180 Land 190 Equipment 191 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 216 Salaries Payable 218 Sales Tax Payable 219 Customers Refunds Payable 221 Notes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends 34 Income Summary Lean accounting Instructions Chart of Accounts Journal Final Question X Instructions Audio Escape Inc. manufactures audio speakers. Each speaker requires $125 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for December: 1 Speaker assembly cell, estimated costs: 2 Labor $5,800.00 3 Depreciation 2,900.00 4 Supplies 2,100.00 5 Power 20,700.00 6 Total cell costs for the period $31,500.00 The operating plan calls for 210 operating hours for the period. Each speaker requires 18 minutes of cell process time. The unit selling price for each speaker is $380. During December, the following transactions occurred: Dec. 2 Purchased materials to produce 800 speaker units. 6 Applied conversion costs to production of 780 speaker units. 21 Completed and transferred 765 speaker units to finished goods. 29 Sold 750 speaker units. There were no inventories at the beginning of December. Required: A. Journalize the summary transactions for December. Refer to the Chart of Accounts for exact wording of account titles. B. Determine the ending balance for raw and in process inventory and finished goods inventory. X Chart of Accounts CHART OF ACCOUNTS Audio Escape Inc. General Ledger ASSETS 110 Cash 120 Accounts Receivable 125 Notes Receivable 140 Office Supplies 141 Store Supplies 142 Prepaid Insurance 150 Raw and In Process Inventory 151 Finished Goods Inventory 180 Land 190 Equipment 191 Accumulated Depreciation-Equipment LIABILITIES 210 Accounts Payable 216 Salaries Payable 218 Sales Tax Payable 219 Customers Refunds Payable 221 Notes Payable EQUITY 31 Common Stock 32 Retained Earnings 33 Dividends 34 Income Summary REVENUE 410 Sales EXPENSES 510 Cost of Goods Sold 511 Conversion Costs 521 Advertising Expense 523 Depreciation Expense-Equipment 526 Salaries Expense 531 Rent Expense 533 Insurance Expense 534 Store Supplies Expense 535 Office Supplies Expense 536 Credit Card Expense 539 Miscellaneous Expense 710 Interest Expense X Journal A. Journalize the summary transactions for December. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL DATE DESCRIPTION POST. REF. DEBIT CREDIT 1 2 3 4 5 6 7 8 9 10

B. Determine the ending balance for raw and in process inventory and finished goods inventory.

Raw and In Process Inventory, ending balance
Finished Goods Inventory, ending balance

Answer 1

	Budgeted cell conversion cost per hour	150	per hour	=31500/210
	Budgeted cell conversion cost per unit	45	per unit	=150*(18/60)
A
Date	Description	Debit	Credit
Dec 31	Raw and in process inventory	100000		=800*125
	Accounts Payable		100000
Dec 31	Raw and in process inventory	35100		=780*45
	Conversion costs		35100
Dec 31	Finished goods inventory	130050		=765*(125+45)
	Raw and in process inventory		130050
Dec 31	Accounts Receivable	285000		=750*380
	Sales		285000
Dec 31	Cost of goods sold	127500		=750*(125+45)
	Finished goods inventory		127500
B
	Raw and In Process Inventory,ending	5050		=100000+35100-130050
	Finished Goods Inventory, ending	2550		=130050-127500