In: Accounting
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Maria Young is the sole stockholder of Purl of Great Price Company (POGP Company), which produces high-end knitted sweaters and sweater vests for sale to retail outlets. The company started in January of the current year, and employs three knitters (each of whom work 40 hours per week) and one office manager/knitting supervisor (this employee works 20 hours per week as office manager, and 20 hours per week as knitting supervisor). All wages are paid in cash at the end of each month.
Each knitter has a knitting machine that is used about 2/3 of the knitter’s time, the rest of the knitter’s time being involved in hand knitting and piecing together the garments. The company also has a packaging machine used to wrap the garments in plastic for shipping, which is operated by the office manager/knitting supervisor approximately 5 hours per week.
The knitting machines were purchased on January 1 of the current year, and cost $2,400 each, with an anticipated useful life of 10 years and no salvage value. The packaging machine was purchased on the same date and cost $4,800, with the same anticipated useful life and salvage value.
Required: | |||||||||||||
1. | Review the data in the Predetermined Factory Overhead Rate panel, and compute the predetermined factory overhead rate for POGP Company. | ||||||||||||
2. | On December 10, POGP Company
receives an order for 200 sweater vests and assigns Job 83 to the
order. Review the Materials Requisition panel.
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3. | On December 15, review the
source documents on the Time Tickets panel.
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4. | On December 21, Job 62 is completed. Review the Job Cost Sheets panel and your journal entries. Journalize the entry to move the associated costs to the Finished Goods account.* | ||||||||||||
5. | On December 22, 75 of the 100
sweaters from Job 62 are sold on account for $125 each. Journalize
the following transactions*:
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6. | On December 31, the last work
day of the year for the knitters, review the source documents on
the Time Tickets panel.
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7. | On December 31, journalize the
following transactions*. Note that expenses (B), (C), and (D) were
paid in cash.
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8. | On December 31, prepare the journal entry to dispose of the balance in the Factory Overhead account.* | ||||||||||||
9. | What are the balances in the
following accounts as of December 31?
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Chart of Accounts
CHART OF ACCOUNTS | |||||||||||||||||||||||||||||||||||||||||||||||
POGP Company | |||||||||||||||||||||||||||||||||||||||||||||||
General Ledger | |||||||||||||||||||||||||||||||||||||||||||||||
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Nov. 30 Trial Balance
POGP Company
UNADJUSTED TRIAL BALANCE
November 30, 20Y8
ACCOUNT TITLE | DEBIT | CREDIT | |
---|---|---|---|
1 |
Cash |
20,000.00 |
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2 |
Accounts Receivable |
1,000.00 |
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3 |
Supplies |
200.00 |
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4 |
Materials |
5,000.00 |
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5 |
Work in Process |
5,404.00 |
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6 |
Equipment |
12,000.00 |
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7 |
Accumulated Depreciation-Equipment |
825.00 |
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8 |
Accounts Payable |
150.00 |
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9 |
Common Stock |
10,000.00 |
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10 |
Retained Earnings |
12,000.00 |
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11 |
Dividends |
18,096.00 |
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12 |
Sales |
307,500.00 |
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13 |
Cost of Goods Sold |
255,040.00 |
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14 |
Factory Overhead |
15.00 |
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15 |
Wages Expense |
13,750.00 |
|
16 |
Totals |
330,490.00 |
330,490.00 |
Predetermined Factory Overhead Rate
Since the company is more reliant on labor than machines, Maria decides to use direct labor hours (DLH) as the activity base for her predetermined factory overhead rate, rather than machine hours (MH).
Estimated Selected Amounts for the Year |
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Estimated depreciation on equipment | $1,200.00 |
Estimated total Office Manager/Knitting Supervisor wages | $36,000.00 |
Estimated office utilities | $3,000.00 |
Estimated factory utilities | $4,800.00 |
Estimated factory rent | $24,000.00 |
Activity Base Data | |
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Estimated number of DLH for the year | 5,000 |
Estimated number of MH for the year | 3,500 |
Calculate the predetermined factory overhead rate for the current year. If required, round your answers to the nearest cent.
Materials Requisition
Materials Requisition | Date: Dec. 10 | ||
Req. No. 12255 | Job No. 83 | ||
Description | Qty. Issued | Unit Price | Amount |
Yarn type B | 600 skeins | $5.00 | $3,000 |
Total issued | $3,000 |
Time Tickets
Time Ticket | No. 1255 | Name: | Susan Blake | |
Work Description: | Knitting/piecing | |||
Dates | Job No. | Hours Worked | Unit Price | Amount |
12/01-12/15 | 62 | 65 | $15.00 | $975.00 |
12/16-12/31 | 83 | 103 | $15.00 | $1,545.00 |
Total Cost | $2,520.00 |
Time Ticket | No. 2274 | Name: | Josh Porter | |
Work Description: | Knitting/piecing | |||
Dates | Job No. | Hours Worked | Unit Price | Amount |
12/01-12/15 | 62 | 75 | $15.00 | $1,125.00 |
12/16-12/31 | 83 | 88 | $15.00 | $1,320.00 |
Total Cost | $2,445.00 |
Time Ticket | No. 3923 | Name: | Mary Jones | |
Work Description: | Knitting/piecing | |||
Dates | Job No. | Hours Worked | Unit Price | Amount |
12/01-12/15 | 62 | 60 | $15.00 | $900.00 |
12/16-12/31 | 83 | 109 | $15.00 | $1,635.00 |
Total Cost | $2,535.00 |
Job Cost Sheets
Add the amounts in requirements 2(B), 3(C), and 6(C) to the appropriate areas of the following job cost sheets. If there is no amount or an amount is zero, enter "0". If required, round your answers to the nearest cent.
Job 62 | 100 units: | Sweaters | ||
Direct Materials | Direct Labor | Factory Overhead | Total | |
Balance Dec. 1 | $5,000 | $300 | $104 | $5,404 |
Dec. 15 | ||||
Total Cost | ||||
Unit Cost |
Job 83 | 200 units: | Sweater vests | ||
Direct Materials | Direct Labor | Factory Overhead | Total Job Cost | |
Balance Dec. 1 | $0 | $0 | $0 | $0 |
Dec. 10 | ||||
Dec. 31 | ||||
Total Cost |
Journal
Journalize the entries in requirements 2 - 8. Refer to the Chart of Accounts for exact wording of account titles.
PAGE 15
JOURNAL
ACCOUNTING EQUATION
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Final Question
What are the balances in the following accounts as of December 31? If an amount is zero, enter “0”.
Materials | |
Work in Process | |
Finished Goods | |
Factory Overhead | |
Cost of Goods Sold |
1) predetermined factory overhead rate= estimated mmanufactutring overhaead cost
Ditect labour hours
4800*10=48000
40 =1200
2)accounts receivable account. Dr. 200
To work in progress account . 200
3)work in progress account. Dr .
To salary account
B) work in progress account. Dr.
To factory account
C) minimum labour charge
Cost to service pannel
D)work in progress account. Dr
To finished goods account
5) accounts receivable acount . Dr. 4650
To sales account. 4650
B)cost of goods sold account. Dr. 4650
To finished goods account . 4650
6)a) work in process account. Dr
To salary account
B) work in process account. Dr
To factory overhead account
C) minimum labourcharge
Cost of service panel
7)a) depreciation account. Dr
Ti equipment account
B) payroll account. Dr
To cash account
C) rent account. Dr
To cash account
D) utilities account. Dr
To cash accoumt
8) accumilated balance account . Dr
To factort overhead account
9)materials -2400
Work in process salary factory overhead finished goods
Finished goods 480000
Cost of goods sold 7200
Generael ledger
date. Particulaculars. Ammounnt . Date particulaculars. Amount.
To cash. 110 by accounts payable. 210
to a/r. 112. By wages payable. 211
to supplies. 117 . By sales . 410
To material . 118. By cost of hoods sold. 510
to equipment. 125. by factory overhead. 520
To deprn asset. 126. By wages. 525
To finished goods.
To common stock 311
To retained earnings 312
To dividend. 313
to balance. 432
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