Question

I-Bus Manufacturing assembles custom computers. Manufacturing overhead is allocated at a rate of $5 per machine hour. The following information is available. (Note that factory supplies are indirect materials and are maintained in the raw materials stockroom and thus are included in the raw materials inventory balance):

Raw materials 1/1/19                 $ 15             Raw materials & factory supplies purchased      $165

Work in process 1/1/19                   5             Direct labor                                                       105  

Finished goods 1/1/19                   10             President’s salary                                                  36

Direct materials used                    145             Factory supplies used                                            10 Depreciation on plant                       19             Indirect factory labor used                                   30

Utilities on the factory                    16             Utilities on showroom floor                                  35

Sales                                           $475              Finished goods 12/31/19                                     12

Raw materials 12/31/19                ???            Work in process 12/31/19                                   20

Salesperson salary                         25             Property taxes, administration bldg                         5

Manufacturing overhead allocated, 17 actual machine hours    ??

REQUIRED:

1)

1. Prepare the journal entries for the above information (15 journal entries).
2. Prepare the journal entry to close the over-or-under applied overhead to cost of goods.
3. Prepare a cost of goods manufactured statement.
4. Prepare a cost of goods sold statement.
5. Prepare an income statement.

Answer 1