Question

Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows:

Morrison Company
Balance Sheet
January 1
Assets
Cash				$	43,950
Raw materials	$	15,200
Work in process		6,100
Finished goods		24,000			45,300
Prepaid expenses					3,125
Property, plant, and equipment (net)					158,000
Total assets				$	250,375
Liabilities and Stockholders’ Equity
Accounts payable				$	7,300
Retained earnings					243,075
Total liabilities and stockholders’ equity				$	250,375

During January the company completed the following transactions:

Purchased raw materials on account, $83,200.

Raw materials used in production, $96,700 ($80,200 was direct materials and $16,500 was indirect materials).

Paid $173,600 of salaries and wages in cash ($96,200 was direct labor, $38,850 was indirect labor, and $38,550 was related to employees responsible for selling and administration).

Various manufacturing overhead costs incurred (on account) to support production, $45,900.

Depreciation recorded on property, plant, and equipment, $77,200 (70% related to manufacturing equipment and 30% related to assets that support selling and administration).

Various selling expenses paid in cash, $28,550.

Prepaid insurance expired during the month, $1,950 (80% related to production, and 20% related to selling and administration).

Manufacturing overhead applied to production, $139,000.

Cost of goods manufactured, $293,500.

Cash sales to customers, $400,600.

Cost of goods sold (unadjusted), $289,000.

Cash payments to creditors, $81,800.

Underapplied or overapplied overhead $? .

Required:

1. Calculate the ending balances that would be reported on the company's balance sheet on January 31^st. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for its affect on the balance sheet.)

2. What is Morrison Company’s net operating income for the month of January?\

Calculate the ending balances that would be reported on the company's balance sheet on January 31^st. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for its affect on the balance sheet.) (Amounts to be deducted should be indicated by a minus sign.)

Morrison Company Transaction Analysis For the Month Ended Jaunary 31 Transactions Cash Raw Materials Work in Process Finished Goods Manufacturing Overhead Prepaid Expenses PP&E (net) = Accounts Payable Retained Earnings Beginning balances @1/1 $43,950 $15,200 $6,100 $24,000 $0 $3,125 $158,000 = $7,300 $243,075 (a) Raw material purchases 83,200 = 83,200 (b) Raw materials used in production (96,700) 80,200 16,500 = (c) Salaries and wages (173,600) 96,200 38,850 = (38,550) (d) Various overhead costs 45,900 = 45,900 (e) Depreciation 54,040 (77,200) = (23,160) (f) Various selling expenses (28,550) = (28,550) (g) Expiration of prepaid insurance 1,560 (1,950) = (390) (h) Manufacturing overhead applied 139,000 (139,000) = (i) Cost of goods manufactured (293,500) 293,500 = (j) Sales 400,600 = 400,600 (k) Cost of goods sold (289,000) = (289,000) (l) Payments to creditors (81,800) = (81,800) (m) Underapplied overhead 17,850 = 17,850 Ending balances @ 1/31 $160,600 $1,700 $28,000 $28,500 $357,500 $1,175 $80,800 $54,600 $281,750

What is Morrison Company’s net operating income for the month of January?

	Net operating income $38,675

the bold and italicize no is keep coming wrong.

Answer 1

1. Ending balances that would be reported on the company's balance sheet on January 31st is as shown below:

Morrison Company
Transaction Analysis
For the Month Ended Jaunary 31
Transactions		Cash	Raw Materials	Work in Process	Finished Goods	Manufacturing Overhead	Prepaid Expenses	PP&E (net)	=	Accounts Payable	Retained Earnings
	Beginning balances @1/1	$ 43,950	$ 15,200	$ 6,100	$ 24,000	$ 0	$ 3,125	$ 158,000	=	$ 7,300	$ 243,075
(a)	Raw material purchases		83,200						=	83,200
(b)	Raw materials used in production		-96,700	80,200		16,500			=
(c)	Salaries and wages	-173,600		96,200		38,850			=		-38,550
(d)	Various overhead costs					45,900			=	45,900
(e)	Depreciation					54,040		-77,200	=		-23,160
(f)	Various selling expenses	-28,550							=		-28,550
(g)	Expiration of prepaid insurance					1,560	-1,950		=		-390
(h)	Manufacturing overhead applied			139,000		-139,000			=
(i)	Cost of goods manufactured			-293,500	293,500				=
(j)	Sales	400,600							=		400,600
(k)	Cost of goods sold				-289,000				=		-289,000
(l)	Payments to creditors	-81,800							=	-81,800
(m)	Underapplied overhead					-17,850			=		-17,850
	Ending balances @ 1/31	$ 160,600	$ 1,700	$ 28,000	$ 28,500	$ 0	$ 1,175	$ 80,800		$ 54,600	$ 246,175

2.  Morrison Company’s net operating income for the month of January is:

Particulars	Amount ($)
Sales	400,600
Less: Cost of goods sold	-289,000
Less: Underapplied Overhead	-17,850
Gross Profit	93,750
Less: Expenses
Salaries and Wages Expense	-38,550
Depreciation expense	-23,160
Various selling expense	-28,550
Insurance Expense	-390
	-90,650
Net Income	3,100