Question

Christopher’s Custom Cabinet Company uses a job order cost system with overhead applied as a percentage of direct labor costs. Inventory balances at the beginning of 2016 follow: Raw Materials Inventory $ 17,000 Work in Process Inventory 6,300 Finished Goods Inventory 20,500 The following transactions occurred during January: (a) Purchased materials on account for $26,400. (b) Issued materials to production totaling $22,000, 90 percent of which was traced to specific jobs and the remainder of which was treated as indirect materials. (c) Payroll costs totaling $19,000 were recorded as follows: $11,300 for assembly workers 1,500 for factory supervision 2,800 for administrative personnel 3,400 for sales commissions (d) Recorded depreciation: $5,200 for machines, $600 for the copier used in the administrative office. (e) Recorded $1,900 of expired insurance. Forty percent was insurance on the manufacturing facility, with the remainder classified as an administrative expense. (f) Paid $4,900 in other factory costs in cash. (g) Applied manufacturing overhead at a rate of 200 percent of direct labor cost. (h) Completed all jobs but one; the job cost sheet for this job shows $2,200 for direct materials, $2,500 for direct labor, and $5,000 for applied overhead. (i) Sold jobs costing $51,500. The revenue earned on these jobs was $66,950. Required: 1. Set up T-accounts, record the beginning balances, post the January transactions, and compute the final balance for the following accounts: (Post all amounts separately. Do not combine/add any dollar amounts when posting to the t-accounts.) Raw Materials Inventory. Work in Process Inventory. Finished Goods Inventory. Cost of Goods Sold. Selling, General, and Administrative Expenses. Sales Revenue. Other accounts (Cash, Payables, etc.).

Answer 1

Raw Materials Inventory
	Debit	Credit
Beg. Bal.	17000	22000	b.
a.	26400
End. Bal.	21400
Work in Process Inventory
	Debit	Credit
Beg. Bal.	6300	50300	h.
b.	19800
c.	11300
g.	22600
End. Bal.	9700
Finished Goods Inventory
	Debit	Credit
Beg. Bal.	20500	51500	i.
h.	50300
End. Bal.	19300
Manufacturing Overhead
	Debit	Credit
b.	2200	22600	g.
c.	1500
d.	5200
e.	760
f.	4900
End. Bal.		8040
Cost of Goods Sold
	Debit	Credit
i.	51500
End. Bal.	51500
Selling, General, Administrative Expenses
	Debit	Credit
c.	2800
c.	3400
d.	600
e.	1140
End. Bal.	7940
Sales Revenue
	Debit	Credit
		66950	i.
End. Bal.		66950
Other Accounts (Cash, Payables, etc.)
	Debit	Credit
i.	66950	26400	a.
		19000	c.
		5800	d.
		1900	e.
		4900	f.
End. Bal.	8950