Question

In: Accounting

Bergamo Bay's computer system generated the following trial balance on December 31, 2019. The company’s manager...

Bergamo Bay's computer system generated the following trial balance on December 31, 2019. The company’s manager knows something is wrong with the trial balance because it does not show any balance for Work in Process Inventory but does show a balance for the Factory Overhead account. In addition, the accrued factory payroll (Factory Wages Payable) has not been recorded.

Debit Credit
Cash $ 80,000
Accounts receivable 49,000
Raw materials inventory 29,500
Work in process inventory 0
Finished goods inventory 15,000
Prepaid rent 5,000
Accounts payable $ 8,700
Notes payable 11,700
Common stock 50,000
Retained earnings 77,000
Sales 202,100
Cost of goods sold 105,000
Factory overhead 28,000
Operating expenses 38,000
Totals $ 349,500 $ 349,500


After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.

Materials requisition 21-3010: $ 4,700 direct materials to Job 402
Materials requisition 21-3011: $ 7,900 direct materials to Job 404
Materials requisition 21-3012: $ 1,700 indirect materials
Labor time ticket 6052: $ 4,000 direct labor to Job 402
Labor time ticket 6053: $ 16,000 direct labor to Job 404
Labor time ticket 6054: $ 5,000 indirect labor


Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 100% of direct labor cost.

3. Prepare a revised trial balance.

4. Prepare an income statement for 2019 and a balance sheet as of December 31, 2019.

Solutions

Expert Solution

Sollution 3
Revised Trial Balance
Account Titles Debit Credit
Cash $80,000.00
Accounts Receivable $49,000.00
Raw Materials Inventory(Notes 1) $15,200.00
Work in Process Inventory(Notes 2) $52,600.00
Finished Goods Inventory $15,000.00
Prepaid Rent $5,000.00
Accounts Payable $8,700.00
Factory Wages Payable(Notes 3) $25,000.00
Notes Payable $11,700.00
Common Stock $50,000.00
Retained Earnings $77,000.00
Sales $202,100.00
Cost of Goods Sold (Notes 4) $119,700.00
Operating Expenses $38,000.00
Totals $374,500.00 $374,500.00
Note 1
Raw Materials
Opening Balance $29,500.00
direct materials to Job 402 ($4,700.00)
direct materials to Job 404 ($7,900.00)
indirect materials ($1,700.00)
Balance $15,200.00
Notes 2
Work in Process Inventory
Job 402 Job 404 Total
Direct Material $4,700.00 $7,900.00 $12,600.00
Direct Labor $4,000.00 $16,000.00 $20,000.00
Overhead(100% of direct labour cost) $4,000.00 $16,000.00 $20,000.00
Total $12,700.00 $39,900.00 $52,600.00
Notes 3 Wages Payable = $20000 + $5,000 = $25000
Notes 4 Cost of goods sold = $105,000 +$14700* =$119700
*$28000+$1700+$5000-$20000=$14700
Sollution 4
Account Name Income Statement Balance sheet
Debit Credit Debit Credit
Cash $80,000.00
Accounts Receivable $49,000.00
Prepaid Rent $5,000.00
Finished goods inventory $15,000.00
Raw Materials Inventory $15,200.00
Work in Process Inventory $52,600.00
Accounts Payable $8,700.00
Wages Payable $25,000.00
Retained Earning $77,000.00
Notes Payable $11,700.00
Common Stock $50,000.00
Sales $202,100.00
Cost of goods sold $119,700.00
Operating Expenses $38,000.00
Total $157,700.00 $202,100.00 $216,800.00 $172,400.00
Net Income $44,400.00 $0.00 $0.00 $44,400.00
Total $202,100.00 $202,100.00 $216,800.00 $216,800.00

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