Question

In: Accounting

Forest Components makes aircraft parts. The following transactions occurred in July. Purchased $119,000 of materials on...

Forest Components makes aircraft parts. The following transactions occurred in July.

Purchased $119,000 of materials on account.

Issued $117,600 in direct materials to the production department.

Issued $8,400 of supplies from the materials inventory.

Paid for the materials purchased in transaction (1) using cash.

Returned $15,400 of the materials issued to production in (2) to the materials inventory.

Direct labor employees earned $217,000, which was paid in cash.

Purchased miscellaneous items for the manufacturing plant for $120,400 on account.

Recognized depreciation on manufacturing plant of $245,000.

Applied manufacturing overhead for the month.

Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $3,000,000. Estimated overhead for the year was $2,790,000. The following balances appeared in the inventory accounts of Forest Components for July.

Beginning Ending Materials Inventory beginning: ? ending: $88,200

Work-in-Process Inventory beginning: ? ending: 73,500

Finished Goods Inventory beginning: $18,200 ending: 49,700

Cost of Goods Sold beignning: ? ending: 521,500

Required:

a. Prepare journal entries to record these transactions.

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.

Solutions

Expert Solution

predeternined overhead rate
estimated overhead/estimated direct labor costs
2,790,000/3,000,000
93%
TR General journal Debit Credit
1) Raw materials inventory 119,000
Accounts payable 119,000
2) Work in process inventory 117,600
Raw materials inventory 117,600
3) manufacturing overhead 8,400
Raw materials inventory 8,400
4) Accounts payable 119,000
cash 119,000
5) Raw materials inventory 15,400
work in process inventory 15,400
6) work in process inventory 217,000
cash 217,000
7) manufacturing overhead 120,400
Accounts payable 120,400
8) Manufacturing overhead 245,000
Accumulated depreciation 245,000
9) work in process inventory 201810
applied Manufacturing overhead 201,810
Materials inventory
Beg.Bal 79,800 Work in process inventory
1) 119,000 117,600 2) beg .bal 105,490
5) 15,400 8,400 3) 2) 117,600 15,400 5)
6) 217,000 553,000 Trfd to finished
9) 201810 goods
end bal 88,200
End bal 73,500
Manufacturing overhead control Applied manufacturing overhead
Beg.bal 0 Beg.Bal 0
3) 8,400 201810 9)
7) 120,400
8) 245,000
End bal 373800 end bal 201810
Accounts payable Cash
Beg.Bal 0 Beg.Bal 0
4) 119,000 119,000 1) 119,000 4)
120,400 7) 217,000 6)
End bal 120,400 End bal 336,000
Accumulated Depreciation -PP&E finished goods inventory
Beg.bal 0 Beg bal 18,200
245,000 8) goods com 553,000 521,500 Trfd to COGS
End bal 245000 end bal 49,700
cost of goods sold
Beg.Bal 0
Goods comp 521,500
End bal 521500

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