Question

K&J Bakery Inc. opened for business on January 1, 20X1 as planned. During the month of January, the business purchased and used 200 pounds of flour, 200 pounds of sugar, 67 dozen eggs and had 5 bad eggs to dispose of during the month, 20 baking soda boxes, 200 pounds of butter, 100 pounds of raisons, 50 bottles of run, and the other ingredients (one box of each for a total of four) all from one supplier on account. Manufacturing overhead is applied to production at $4 per cake. Keisha purchased the oven using the startup capital and paid all salaries. Her nieces worked 300 hours in total for the month. January was a very good month for the bakery since it baked 200 cakes and sold all for cash. The average selling price was $50 per cake. All manufacturing overhead is closed out at month end. The supplier was paid at month end. Required: Document K&J Bakery Inc January transactions using journal entries (round all calculations to 2 decimal places). All other costs such as utilities, must be accounted for in the journal entries (assume such transactions where applicable, are paid in cash).

Answer 1

Income Statement K&J Bakery Inc.
Since Rates Not Available in Question Amount Derived based on Assumed Rates
Items	Rate ($)	QTY or HRS	Amount ($)
flour	5	200	1,000.00
Sugar	4	200	800.00
67 dozen eggs	10	67	670.00
baking Soda	5	20	100.00
butter	20	200	4,000.00
riason	6	100	600.00
run	15	50	750.00
A) Material			7,920.00
Manufacturing OH	4	200	800.00
Wages (assumed only his Nieces is working)	5	200	1,000.00
Depreciation of Oven for January ( Assumed Cost $100 life 5 years ) =600/(5*12)			10.00
		Total Cost	9,730.00
Sales	50	200	10,000.00
Profit			$     270.00

Journal Entries in the books of K&J Bakery Inc.
DATE	PARTICULAR	DEBIT ($)	CREDIT ($)
1	Purchase of Material
	Flour	1000
	SUGAR	800
	Eggs	670
	Baking Soda	100
	Butter	4000
	RIASON	600
	RUN	750
	To Cash		7920
2	Payment of Manufacturing OH
	Manufacturing Overhead	200
	To Cash		200
3	Wages Payment
	Wages	200
	To Cash		200
4	Depreciation Charged on Oven
	Depreciation	10
	To Oven (Fixed Assets)		10
5	Sale of Cakes
	Cash	10000
	To Sales		10000