Question

Required information

Problem 19-2A Source documents, journal entries, overhead, and financial reports LO P1, P2, P3, P4

[The following information applies to the questions displayed below.]

Bergamo Bay's computer system generated the following trial balance on December 31, 2017. 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 Payroll Payable) has not been recorded.

	Debit	Credit
Cash	$58,000
Accounts receivable	36,000
Raw materials inventory	23,000
Work in process inventory	0
Finished goods inventory	6,000
Prepaid rent	2,000
Accounts payable		$9,100
Notes payable		12,100
Common stock		20,000
Retained earnings		92,000
Sales		171,800
Cost of goods sold	106,000
Factory overhead	32,000
Operating expenses	42,000
Totals	$305,000	$305,000

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:	$1,600	indirect materials
Labor time ticket 6052:	$3,000	direct labor to Job 402
Labor time ticket 6053:	$9,000	direct labor to Job 404
Labor time ticket 6054:	$4,000	indirect labor

Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 150% of direct labor cost.

Problem 19-2A Part 3

3. Prepare a revised trial balance.

-part4

Required information

Problem 19-2A Source documents, journal entries, overhead, and financial reports LO P1, P2, P3, P4

[The following information applies to the questions displayed below.]

Bergamo Bay's computer system generated the following trial balance on December 31, 2017. 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 Payroll Payable) has not been recorded.

	Debit	Credit
Cash	$58,000
Accounts receivable	36,000
Raw materials inventory	23,000
Work in process inventory	0
Finished goods inventory	6,000
Prepaid rent	2,000
Accounts payable		$9,100
Notes payable		12,100
Common stock		20,000
Retained earnings		92,000
Sales		171,800
Cost of goods sold	106,000
Factory overhead	32,000
Operating expenses	42,000
Totals	$305,000	$305,000

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:	$1,600	indirect materials
Labor time ticket 6052:	$3,000	direct labor to Job 402
Labor time ticket 6053:	$9,000	direct labor to Job 404
Labor time ticket 6054:	$4,000	indirect labor

Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 150% of direct labor cost.

Problem 19-2A Part 4

4. Prepare an income statement for 2017 and a balance sheet as of December 31, 2017.

Answer 1

Req 2.
Adjusted balance:
Raw material inventory:
Unadjusted balance			23000
Less: Issues
Job 402			4700
Job 404			7900
Indirect material			1600
Adjusted balance:			8800
WORK in process:
Unadjusted balance			0
Cost incurred
Job 402 (4700+3000+4500)			12200
Job 404 (7900+9000+13500)			30400
Adjusted balance			42600
Wages payable (3000+9000+4000)			16000
Factory Overheads:
Unadjusted balance			32000
Add: Indirecct material			1600
Add: Indirect labour			4000
Less: Applied (12000*150%)			-18000
Adjusted balance in Overhead			19600
(to be closed in COGS)
Trial balance:
Cash				58000
Accounts receivabble				36000
Raw material inventory				8800
WIP inventory				42600
Finished goods inventory				6000
Prepaid rent				2000
Accounts payable					9100
Notes payable					12100
Wages payable					16000
Common Stock					20000
Retained earnings					92000
Sales					171800
COGS				106000
Factory overheads				19600
Operating expenses				42000
Total				321000	321000
Req 3.
Income Statement:
Sales revenue					171800
less: Adjusted COGS
unadjusted COGS				106000
add: factory overheads underapplied				19600	125600
Gross Margin					46200
Less: Operating expenses					42000
Net income					4200
Balance Sheet:
Assets:
Cash			58000
Accounts receivable			36000
Raw material inventory			8800
WIP inventory			42600
FG inventory			6000
Prepaid rent			2000
Total assets			153400
Liabilities and Stockholder's equity
Liabilities:
Accounts payable		9100
Notes payable		12100
wages payable		16000
Total liabilities			37200
Stockholder's equity:
Common Stock		20000
Retained earings (92000+4200)		96200	116200
Total liabilities and Stockholder's equity			153400