Accounts Receivable

The following table indicates the historical breakout of accounts receivable

Days	Current	30 to 60	60 to 90	Over 90
Percent of Balance	50%	30%	15%	5%
Percent Collectible	95%	90%	80%	60%

The company uses the gross method of recording all sales on accounts.

Marketable Securities

The interest rate earned on marketable securities is 6.0%.

Inventory

In 20x2, the company had used the gross method to record inventory purchases on account. As of January 1, 20x3, the company is using the net method to record inventory purchases on account.

Prepaid Insurance

A three-year insurance policy in the amount of $7,200 was purchased on July 1, 20x2.

Equipment

Equipment is depreciated at an average amount of $3,000 per month.

Building

The current building was purchased on January 1, ten years ago and has an expected 40-year life at which time its salvage value will be $40,000.

Intangible Assets

Intangible assets were initially valued at $80,000 and are being depreciated over 40 years at $2,000 per year.

Short-Term Notes Payable

The one-year short-term notes payable are due on March 1, 20x3. The interest rate is 5.0% which is payable at maturity.

Long-Term Notes Payable

The long-term notes payable are due in ten years. The interest rate on the notes is 4.5%.

Bonds Payable

The bonds payable mature in twenty years. The interest rate on the bonds is 4.0%.

Mortgage Payable

The following amortization schedule can be used for the January, 20x3 mortgage payment on the 7.0%, 30- year mortgage.

Month	Payment	Interest	Principal	Balance
January	$3,500	$1,867	$1,633	$320,000 $318,367

Capital Stock

The capital stock is common stock at $10 par value with 50,000 shares authorized, and 10,000 shares issued and outstanding.

Journal Entries

Jan 1 Equipment with a historical cost of $10,000 and an accumulated depreciation of $3,000 was sold for $6,000

Jan   2 Equipment with a historical cost of $20,000 and an accumulated depreciation of $18,000 was disposed of with an additional disposal cost of $1,300.

Jan   2 Sanford Company borrowed $24,000 on a short-term discounted 90 day, 3.0% noninterest-bearing note payable.

Jan 3 Sanford Company paid $18,000 in advance for the 6 month rental of a warehouse.

Jan 3 Equipment with a historical cost of $50,000 and an accumulated depreciation of $35,000 was traded for new similar equipment valued at $75,000. Sanford Company received $14,500 as a trade in for the old equipment, paid $7,500 and established a 4.5% long-term note payable for the balance due.

Jan 4 Equipment with a historical cost of $35,000 and an accumulated depreciation of $20,000 was traded for new dissimilar equipment valued at $60,000. The salvage value of the old equipment was $5,000 and the trade in value was $7,000. Sanford paid $4,000 for the equipment and established a 4.5% long-term note payable for the balance due.

Jan 5 Sanford Company declared a dividend of $2.00 per share payable on February 10, 20x3 to all shareholders of record on January 20, 20x3.

Jan 6 The amount in wages payable and taxes payable was paid in full.

Jan 8 Sanford Company paid a total of $18,000 on accounts payable and was able to take advantage of $1,500 in purchase discounts for early payment. The original inventory purchase was recorded at the full amount (gross method).

Jan 15 Cash sales for two weeks equaled $22,000. The cost of inventory sold equaled $12,000.

Jan 20 Supplies in the amount of $4,200 were purchased for cash.

Jan 21 A customer who owed $10,000 on an account receivable, agreed to sign a 60-day note receivable with an interest rate of 6.0%. The interest earned on the note will be paid at the maturity date of the note receivable.

Jan 29 The balance of $14,500 in accounts payable was paid.

Jan 30 The company purchased $45,000 of inventory on account with the terms 2/10, net 30. The company has decided to switch to the net method for all inventory purchases on account beginning in 20x3.

Jan 31 Cash sales for two weeks equaled $24,000. The cost of inventory sold equaled $13,000.

Jan 31 Sales on account for the month of January totaled $55,000 with the terms 2/10, net 30. The cost of inventory sold equaled $26,000.

Jan 31 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $4,000 of the revenue was earned in January.

Jan 31 Collected cash of $48,000 from the accounts receivable, plus there was a total sales discount of $1,000 for the payment of receivables within the ten day discount period.

Jan 31 Salary expenses in the amount of $14,000 and tax expenses in the amount of $8,000 were paid.

Jan 31 The utility bill of $2,500 was paid.

Jan 31 A bill in the amount of $3,600 for advertising expenses incurred during the month of January was received.

Jan 31 The monthly payment for January of the mortgage payable was made.

Feb 1 The Sanford Company made a new issue of 5,000 shares of common stock for cash. The market price of the stock was $40 per share.

Feb 2 A petty cash fund in the amount of $500 was established.

Feb 3 The Sanford Company bought back 1,000 shares of its own common stock for $40 per share.

Feb 8 The purchase of inventory on account on Jan 30th was paid in full.

Feb 10 Sanford Company sold the note receivable from Jan 21st to the bank, which discounted the note at 8.0%.

Feb 15 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Feb 20 The company purchases $20,000 of inventory on account with the terms 2/10, net 30.

Feb 27 The company paid an advertising bill for $5,600 which included the February advertising expense of $2,000 plus the balance due from January.

Feb 28 Cash sales for two weeks equaled $25,000. The cost of inventory sold equaled $14,000.

Feb 28 The monthly payment for February of the mortgage payable was made.

Feb 28 The company collected cash of $59,000 from the accounts receivable, plus there was a total sales discount of $1,100 for the payment of receivables within the ten day discount period.

Feb 28 Salary expenses in the amount of $21,000 and tax expenses in the amount of $9,000 were paid.

Feb 28 The utility bill of $2,100 was paid.

Feb 28 Sales on account for the month of February totaled $60,000 with the terms 2/10, net 30. The cost of inventory sold equaled $30,000.

Mar 1 The short-term note payable that was due on March 1st plus all appropriate interest was paid.

Mar 3 The amount of the petty cash fund was increased by $200.

Mar 10 Supplies in the amount of $2,700 were purchased for cash.

Mar 15 Cash sales for two weeks equaled $27,000. The cost of inventory sold equaled $15,000.

Mar 20 Sanford Company reissued 300 shares of its own stock for $42 per share.

Mar 21 The bank notified Sanford Company that the note receivable from January 21st had not been paid. The bank collected the amount of the note plus the interest due and a $20 protest fee from Sanford Company. Sanford Company charged the full amount of the note receivable plus related fees against the customer’s account receivable balance.

Mar 25 The company purchased $50,000 of inventory on account with the terms 2/10, net 30.

Mar 28 The purchase of inventory on account on Feb 20th was paid in full.

Mar 29 The petty cash fund had $150 in cash and receipts in total amounts for the following expense categories: entertainment$160, travel $170, postage $90, and supplies $115. The petty cash fund was replenished.

Mar 30 Cash sales for two weeks equaled $20,000. The cost of inventory sold equaled $11,000.

Mar 30 The unearned revenue represented the rental of special equipment that was used by another company on weekends. $9,000 of the revenue was earned in March.

Mar 31 Sales on account for the month of March totaled $67,000 with the terms 2/10, net 30. The cost of inventory sold equaled $36,000.

Mar 31 Salary expenses in the amount of $16,000 and tax expenses in the amount of $7,000 were paid.

Mar 31 Collected cash of $70,000 from the accounts receivable, plus there was a total sales discount of $1,200 for the payment of receivables within the ten day discount period.

Mar 31 A warehouse building was acquired for $250,000. Closing costs on the acquisition equaled $7,000, and there were costs of $10,300 to get the building into an operational condition to be used by Sanford Company. Employee salaries specifically related to the building renovation were an additional $5,400. This salary expense was part of the normal monthly expenses and would have been incurred regardless of whether the employees worked on the warehouse or did other activities within the company. Sanford Company paid $100,000 in cash as a down payment with the balance due being added to the mortgage payable account.

Mar 31 The utility bill of $3,000 was paid.

Mar 31 Sanford Company repaid the 90 day discounted note payable from January 2nd in full.

Mar 31 The equipment depreciation entry for the three months of 20x3 was completed.

Mar 31 The depreciation entry for the building for the months of January, February, and March was entered.

Mar 31 The amortization of intangible assets for the three months of 20x3 was completed.

Mar 31 The bad debt expense based on the aging schedule for accounts receivable was determined for the three month period.

Mar 31 Salary expenses incurred during the month of March but not yet paid equaled $8,400 and tax expenses equaled $2,800.

Mar 31 A physical inventory of supplies indicated a total amount of $5,000 of supplies still on hand.

Mar 31 A customer sent an advance payment of $10,000 for the use of special equipment in April and May.

Mar 31 The amount of rent expense for the warehouse for the first three months of 20x3 was recognized.

Mar 31 Sanford Company provided services to a customer in the amount of $3,000 during March but a bill has not been sent.

Mar 31 The amount of insurance expense for the first three months of 20x3 was recognized.

Mar 31 The amount of interest earned on marketable securities for the three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the total long-term notes payable for the first three months of 20x3 was recognized.

Mar 31 The amount of interest expense for the bonds payable for the three months of 20x3 was recognized.

Mar 31 The monthly payment for March of the mortgage payable was made.

Required

1.   Supply journal entries for each of the transactions. The numbers in the journal entries can be rounded to the nearest dollar.

1. What is the Cost Principle?and Definition of Cost Principle

2. give 3 example of Cost Principle

3. Some Issues with the Cost Principle

4. Short-Term vs Long-Term Assets

1. Fauna Inc has the following items at year-end:

Cash in First Bank                                                                  $15,000

Postdated checks                                                                         $450

Bank overdraft in checking account at Second Bank               $400

Savings account balance at Second Bank                               $2,600

Treasury bills maturing in 2 months                                      $2,500

Petty cash on hand                                                                      $600

Cash in Third Bank (bond sinking fund)                                $7,500

Customer checks waiting to be deposited                                 $650

Fauna should report cash and cash equivalents of

Required information

The Foundational 15 [LO2-1, LO2-2, LO2-3, LO2-4]

[The following information applies to the questions displayed below.]

Sweeten Company had no jobs in progress at the beginning of March and no beginning inventories. The company has two manufacturing departments--Molding and Fabrication. It started, completed, and sold only two jobs during March—Job P and Job Q. The following additional information is available for the company as a whole and for Jobs P and Q (all data and questions relate to the month of March):

	Molding			Fabrication			Total
Estimated total machine-hours used		2,500			1,500			4,000
Estimated total fixed manufacturing overhead	$	10,750		$	15,450		$	26,200
Estimated variable manufacturing overhead per machine-hour	$	1.70		$	2.50

	Job P			Job Q
Direct materials	$	16,000		$	9,500
Direct labor cost	$	23,400		$	8,700
Actual machine-hours used:
Molding		2,000			1,100
Fabrication		900			1,200
Total		2,900			2,300

Sweeten Company had no underapplied or overapplied manufacturing overhead costs during the month.

Required:

For questions 1-8, assume that Sweeten Company uses a plantwide predetermined overhead rate with machine-hours as the allocation base. For questions 9-15, assume that the company uses departmental predetermined overhead rates with machine-hours as the allocation base in both departments.

Foundational 2-1

1. What was the company’s plantwide predetermined overhead rate? (Round your answer to 2 decimal places.)

2. How much manufacturing overhead was applied to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)

3. What was the total manufacturing cost assigned to Job P? (Do not round intermediate calculations.)

4. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

5. What was the total manufacturing cost assigned to Job Q? (Do not round intermediate calculations.)

6. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

7. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answers to nearest whole dollar.)

8. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)

9. What were the company’s predetermined overhead rates in the Molding Department and the Fabrication Department? (Round your answers to 2 decimal places.)

10. How much manufacturing overhead was applied from the Molding Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)

11. How much manufacturing overhead was applied from the Fabrication Department to Job P and how much was applied to Job Q? (Do not round intermediate calculations.)

12. If Job P included 20 units, what was its unit product cost? (Do not round intermediate calculations.)

13. If Job Q included 30 units, what was its unit product cost? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

14. Assume that Sweeten Company used cost-plus pricing (and a markup percentage of 80% of total manufacturing cost) to establish selling prices for all of its jobs. What selling price would the company have established for Jobs P and Q? What are the selling prices for both jobs when stated on a per unit basis assuming 20 units were produced for Job P and 30 units were produced for Job Q? (Do not round intermediate calculations. Round your final answer to nearest whole dollar.)

15. What was Sweeten Company’s cost of goods sold for March? (Do not round intermediate calculations.)

These items are taken from the financial statements of Kingbird, Inc. for 2017.

Retained earnings (beginning of year)		$ 33,380
Utilities expense		2,150
Equipment		68,380
Accounts payable		22,250
Cash		14,300
Salaries and wages payable		5,510
Common stock		12,000
Dividends		12,000
Service revenue		72,730
Prepaid insurance		6,010
Maintenance and repairs expense		1,650
Depreciation expense		3,140
Accounts receivable		15,650
Insurance expense		2,660
Salaries and wages expense		41,730
Accumulated depreciation—equipment		21,800

Prepare an income statement for the year ended December 31, 2017.

Kingbird, Inc. Income Statement choose the accounting period  For the Month Ended December 31, 2017For the Year Ended December 31, 2017December 31, 2017
select an opening name for section one  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues
enter an income statement item		$ enter a dollar amount
select an opening name for section two  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues
enter an income statement item	$ enter a dollar amount
enter an income statement item	enter a dollar amount
enter an income statement item	enter a dollar amount
enter an income statement item	enter a dollar amount
enter an income statement item	enter a dollar amount
select a closing name for section two  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		enter a total of the five previous amounts
select a closing name for this statement  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1Retained Earnings, December 31RevenuesTotal ExpensesTotal Revenues		$ enter a total net income or loss amount

eTextbook and Media

List of Accounts

Prepare a retained earnings statement for the year ended December 31, 2017. (List items that increase retained earnings first.)

Kingbird, Inc. Retained Earnings Statement choose the accounting period  For the Month Ended December 31, 2017December 31, 2017For the Year Ended December 31, 2017
select an opening name  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, 2017Retained Earnings, December 31, 2017RevenuesTotal ExpensesTotal Revenues	$ enter a dollar amount
select between addition and deduction  AddLess: select an item  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, 2017Retained Earnings, December 31, 2017RevenuesTotal ExpensesTotal Revenues	enter a dollar amount
	enter a subtotal of the two previous amounts
select between addition and deduction  AddLess: select an item  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, 2017Retained Earnings, December 31, 2017RevenuesTotal ExpensesTotal Revenues	enter a dollar amount
select a closing name  DividendsExpensesNet Income / (Loss)Retained Earnings, January 1, 2017Retained Earnings, December 31, 2017RevenuesTotal ExpensesTotal Revenues	$ enter a total amount

eTextbook and Media

List of Accounts

Prepare a classified balance sheet as of December 31, 2017. (List current assets in order of liquidity.)

Kingbird, Inc. Balance Sheet choose the accounting period  For the Month Ended December 31, 2017For the Year Ended December 31, 2017December 31, 2017
Assets
select an opening name for subsection one  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
enter a balance sheet item			$ enter a dollar amount
enter a balance sheet item			enter a dollar amount
enter a balance sheet item			enter a dollar amount
select a closing name for subsection one  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity					$ enter a total amount for subsection one
select an opening name for subsection two  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
enter a balance sheet item			enter a dollar amount
select between addition and deduction  AddLess: enter a balance sheet item			enter a dollar amount		enter a subtotal of the two previous amounts
select a closing section name for this part of balance sheet  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity					$ enter a total amount of this part of the balance sheet
Liabilities and Stockholders' Equity
select an opening name for subsection one  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
enter a balance sheet item			$ enter a dollar amount
enter a balance sheet item			enter a dollar amount
select a closing name for subsection one  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity					$ enter a total amount for subsection one of the second part of the balance sheet
select an opening name for section two  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity
enter a balance sheet item			enter a dollar amount
enter a balance sheet item			enter a dollar amount
select a closing name for section two  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity					enter a total of the two previous amounts
select a closing name for this part of the balance sheet  Current AssetsCurrent LiabilitiesIntangible AssetsLong-Term InvestmentsLong-Term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity					$ enter a total amount for this part of the balance sheet

A fixed capital investment of P10,000,000 is required for a proposed manufacturing plant and an estimated working capital of P2,000,000. Annual depreciation is estimated to be 10% of the fixed capital investment. Determine the rate of return on the total investment if the annual profit is P2,500,000.  Determine the payout period if the annual profit is P2,500,000

Identify and describe each step in the Accounting Cycle.

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

1. Purchased $16,960 of materials on account.

2. Issued $16,790 in direct materials to the production department.

3. Issued $1,290 of supplies from the materials inventory.

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

5. Returned $2,020 of the materials issued to production in (2) to the materials inventory.

6. Direct labor employees earned $32,300, which was paid in cash.

7. Purchased miscellaneous items for the manufacturing plant for $17,330 on account.

8. Recognized depreciation on manufacturing plant of $36,200.

9. 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 $435,000. Estimated overhead for the year was $430,650.

The following balances appeared in the inventory accounts of Forest Components for July.

	Beginning			Ending
Materials Inventory		?		$	12,510
Work-in-Process Inventory		?			10,550
Finished Goods Inventory	$	2,670			6,910
Cost of Goods Sold		?			73,700

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.

The following represents the financial information for Domingo Corporation for two months.

	March			April
Sales revenue	$	540,000		$	430,000
Costs
Process inspection	$	1,500		$	1,840
Scrap		1,940			1,870
Quality training		19,500			13,500
Warranty repairs		4,200			5,100
Product testing equipment		6,600			7,100
Customer complaints		2,900			3,100
Rework		16,000			19,500
Preventive maintenance		12,700			10,200
Materials inspection		7,400			5,000
Field testing		8,600			11,600

Required:

a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs.

The following represents the financial information for Domingo Corporation for two months.

	March			April
Sales revenue	$	540,000		$	430,000
Costs
Process inspection	$	1,500		$	1,840
Scrap		1,940			1,870
Quality training		19,500			13,500
Warranty repairs		4,200			5,100
Product testing equipment		6,600			7,100
Customer complaints		2,900			3,100
Rework		16,000			19,500
Preventive maintenance		12,700			10,200
Materials inspection		7,400			5,000
Field testing		8,600			11,600

Required:

a. Classify these items into Prevention, Appraisal, Internal failure, or External failure costs.

b. Calculate the ratio of the prevention, appraisal, internal failure, and external failure costs to sales for March and April.

Identify the purposes and types of adjusting entries that an entity might make.

The Welding Department of Healthy Company has the following production and manufacturing cost data for February 2020. All materials are added at the beginning of the process.

Manufacturing Costs						Production Data
Beginning work in process						Beginning work in process		15,500	units, 1/10 complete
Materials		$ 18,200				Units transferred out		54,800
Conversion costs		14,460		$ 32,660		Units started		51,500
Materials				206,250		Ending work in process		12,200	units, 1/5 complete
Labor				67,700
Overhead				69,526

Prepare a production cost report for the Welding Department for the month of February. (Round unit costs to 2 decimal places, e.g. 2.25 and all other answers to 0 decimal places, e.g. 1,225.)

HEALTHY MANUFACTURING COMPANY Welding Department Production Cost Report For the Month Ended February 28, 2020
				Equivalent Units
Quantities		Physical Units		Materials		Conversion Costs
Units to be accounted for
Work in process, February 1
Started into production
Total units
Units accounted for
Transferred out
Work in process, February 28
Total units
Costs				Materials		Conversion Costs		Total
Unit costs
Total Costs				$		$		$
Equivalent units
Unit costs				$		$		$
Costs to be accounted for
Work in process, February 1								$
Started into production
Total costs								$
Cost Reconciliation Schedule
Costs accounted for
Transferred out								$
Work in process, February 28
Materials						$
Conversion costs
Total costs								$

26)

In December 2016, Shire Computer’s management establishes the 2017 predetermined overhead rate based on direct labor cost. The information used in setting this rate includes estimates that the company will incur $780,000 of overhead costs and $520,000 of direct labor cost in year 2017. During March 2017, Shire began and completed Job 13-56.

  
1. What is the predetermined overhead rate for 2017?
2. Using the information on the following job cost sheet, determine the total cost of the job.

Complete this question by entering your answers in the tabs below.

Required 1 Required 2

What is the predetermined overhead rate for 2017?

Overhead Rate

Choose Numerator / Choose Denominator = Overhead Rate

Required 2

Using the information on the following job cost sheet, determine the total cost of the job. (Round your answers to the nearest dollar amount.)

Job Cost Sheet: Job No. 13-56

Direct Materials Direct Labor Overhead Total Cost

Date Requisition No. Amount Time- Ticket No. Amount Costs Applied

Mar.8 4-129 $7,000 T-306 $600

Mar.11 4-142 $6,950 T-432 $1,310

Mar.18 4-167 $3,450 T-456 $1,300

1) Modern Décor Furniture began June with merchandise inventory of 40 sofas that cost a total of $28,000. During the month, Modern Décor purchased and sold merchandise on account as follows:  

June 7	Purchase	30 sofas @ $700 each
14	Sale	30 sofas @ 1,100each
18	Purchase	50 sofas @ $750 each
27	Sale	40 sofas @ $1,150each

Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company's cost of goods sold (COGS), ending merchandise inventory, and gross profit. (20pts)

   

Date	Purchase			Cost of Goods Sold			Inventory On Hand
	Cost	Number	Total	Cost	Number	Total	Cost	Number	Total

2) Taco Hell Inc. had the following balances and transactions during 2017:

Beginning Merchandise Inventory	30 units at $80
March 10	Sold 25 units
June 10	Purchased 40 units at $87
October 30	Sold 30 units

What is the amount of the company's Merchandise Inventory and COGS, as disclosed in the December 31, 2017 balance sheet, using the periodic FIFO inventory costing method? (10pts)

3) Magras Gas uses a perpetual inventory system. Journalize the following sales transactions. (20pts)

June 10	Sold $15,000 of merchandise on account, credit terms are 3/10, n/30. Cost of goods is $8,000.
June 14	Received a $600 sales return from the customer. Cost of the goods is $550.
June 23	Magras Gas receives payment for the customer for the amount due from the June 10 sale.

Date	Transaction	Debit	Credit

Direct Method, Reciprocal Method, Overhead Rates

Macalister Corporation is developing departmental overhead rates based on direct labor hours for its two production departments—Molding and Assembly. The Molding Department employs 19 people, and the Assembly Department employs 75 people. Each person in these two departments works 1,910 hours per year. The production-related overhead costs for the Molding Department are budgeted at $239,000, and the Assembly Department costs are budgeted at $99,000. Two support departments—Engineering and General Factory—directly support the two production departments and have budgeted costs of $221,000 and $379,000, respectively. The production departments’ overhead rates cannot be determined until the support departments’ costs are properly allocated. The following schedule reflects the use of the Engineering Department’s and General Factory Department’s output by the various departments.

	Engineering	General Factory	Molding	Assembly
Engineering hours	—	2,500	2,200	7,800
Square feet	88,200	—	388,080	111,720

For all requirements, round allocation ratios to four significant digits and round allocated costs to the nearest dollar.

Required:

1. Calculate the overhead rates per direct labor hour for the Molding Department and the Assembly Department using the direct allocation method to charge the production departments for support department costs. Round final answers to the nearest cent.

	Overhead rate per DLH
Molding
Assembly

2. Calculate the overhead rates per direct labor hour for the Molding Department and the Assembly Department using the reciprocal method to charge support department costs to each other and to the production departments. Round final answers to the nearest cent. Round your intermediate calculations to four decimal places.

	Overhead rate per DLH
Molding
Assembly

Plata Company produces two products: a mostly handcrafted soft leather briefcase sold under the label Maletin Elegant and a leather briefcase produced largely through automation and sold under the label Maletin Fina. The two products use two overhead activities, with the following costs: Setting up equipment $ 6,000 Machining 19,000 The controller has collected the expected annual prime costs for each briefcase, the machine hours, the setup hours, and the expected production. Elegant Fina Direct labor $9,000 $3,000 Direct materials $3,000 $3,000 Units 3,000 3,000 Machine hours 500 4,500 Setup hours 100 100 Required: 1. Conceptual Connection: Do you think that the direct labor costs and direct materials costs are accurately traced to each briefcase? Explain. 2. Calculate the consumption ratios for each activity. Round your answers to one decimal place. Elegant Fina Machining Setups Calculate the overhead cost per unit for each briefcase by using a plantwide rate based on direct labor costs. Round to the nearest cent. (Note: Do not round intermediate calculations.) Elegant $ per briefcase Fina $ per briefcase ased on your calculations above which of the following statements is correct? More machine and setup costs are assigned to Elegant than Fina. T or F? Conceptual Connection: Calculate the overhead cost per unit for each briefcase by using overhead rates based on machine hours and setup hours. Round your answers to the nearest cent. Elegant $ per unit Fina $ per unit