Question

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.

Answer 1

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