Question

PROBLEM ONE

Donnell Transport assembles prestige mobile homes. Manufacturing overhead is allocated at a rate of $3 per machine hours. The following information is available:

Raw materials 1/1/13                  $ 12              Materials & supplies purchased             $150

Work in process 1/1/13                       2              Direct labor                                         90      

Finished goods 1/1/13                       6              President’s salary                                  36

Direct materials used                    145              Supplies used                                           10

Depreciation on plant                             19              Indirect factory labor used                     30

Utilities on the factory                        9               Utilities on showroom floor                   29

Sales                                            $400             Finished goods 12/31/13                          8

Raw materials 12/31/13                    ???                 Work in process 12/31/13                     17

Salesperson salary                         25              Property taxes, administration bldg         4

Manufacturing overhead allocated, 21 actual machine hours                                         ??

REQUIRED:

Prepare the journal entries for the above information (15 journal entries).

Show the journal entry to close the over-or-under applied overhead to cost of goods control.

Prepare a cost of goods manufactured statement in good form.

Prepare a cost of goods sold statement in good form.

Prepare an income statement in good form.

Answer 1

a)		Amounts in millions
	Account Titles and Explanation	Debit	Credit
a)	Materials Control	$150.00
	Accounts Payable Control		$150.00
b)	Work-in-Process Control	$145.00
	Materials Control		$145.00
c)	Manufacturing Department Overhead Control	$10.00
	Materials Control		$10.00
d)	Work-in-Process Control	$90.00
	Wages Payable Control		$90.00
e)	Manufacturing Department Overhead Control	$30.00
	Wages Payable Control		$30.00
f)	Manufacturing Department Overhead Control	$19.00
	Accumulated Depreciation		$19.00
g)	Manufacturing Department Overhead Control	$9.00
	Various liabilities		$9.00
h)	Work-in-Process Control (21 MH x $3)	$63.00
	Manufacturing Overhead Allocated		$63.00
i)	Finished Goods Control $283
	Work-in-Process Control	$283
j)	Cost of Goods Sold $281
	Finished Goods Control	$281
	Accounts Receivable Control (or Cash )	$400.00
	Cash		$400.00

b)
	Direct Materials Used	$145.00
	Add: Direct Labor Used	$90.00
	Add: Manufacturing Overhead	$63.00
	Add: Beginning Work in Process (WIP) Inventory	$2.00
	Deduct: Ending Work in Process (WIP) Inventory	-$17.00
	Cost of goods Manufactured	$283.00
c)	Beginning Finished Goods	$6.00
	Add: Cost of goods Manufactured	$283.00
	Less: Ending Finished goods	-$8.00
	Cost of Goods Sold	$281.00