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question this part of the problem set is designed to enhance your understanding of j 4289570

Question

This part of the problem set is designed to enhance your understanding of job-order costing and accounting transaction processing associated with the manufacture of a product. Pat has decided to rent a vacant small building located behind the retail store and begin to manufacture some unfinished furniture items. Pat believes there is additional profit to be made by producing items for sale in the Goodwood Collections retail store. Pat also plans to sell the items to other retail unfinished furniture stores in the state. Pat spent the month of March, 2017 moving into the rented building and configuring the factory to produce unfinished wooden furniture. You estimate that 80% of the building space will be used for factory operations. Equipment was purchased and set up, the electric company began to provide electricity to light the facility and operate the equipment. Pat hired two wood workers to produce the furniture and prepaid one year's rent in the amount of $10, 800 for the rented building and one year's insurance in the amount of $3,000. Economic Activity On April 1^st Pat began work on 100 bookcases that can be sold in the Goodwood Collections store or to other unfinished retail stores throughout the state. The design of the bookcase is shown in Figure 1 and is relatively simple to manufacture. The wood pieces are of a simple rectangular configuration and there are few hardware parts required – only screws for assembling the bookcase frame and small metal clips to support the shelves. As Pat's accountant, you note the manufacturing of furniture will be completed in individual and identifiable jobs so you set up a job-order costing system to record and process the cos so p decide that overhead should be applied based upon direct labor hours. The following transactions related to the manufacturing process occurred during the month of April: Wood and other raw materials were purchased on account, delivered and placed into storage, $5,000. Raw materials were requisitioned for use and moved into the shop for production: $2,000 of direct materials and $1,000 of indirect materials. The following costs were accrued for employee services in the production of the 100 bookcases: direct labor of 320 hours, $4,000; indirect labor, $300. The wages will be paid during the first week of next month. Depreciation on the factory equipment for the month of April of $250 is recorded. Pat paid the utility bill of $500 for the electricity used during the month (80% relates to factory operations and 20% relates to administrative activities). One month of prepaid rent on the building housing the factory had expired and one month of prepaid insurance had been consumed. In both cases 80% relates to factory operations and 20% relates to administrative activities. Pat was paid a salary of $1,000 in cash (80% relates to factory operations and 20% relates to administrative activities). Manufacturing overhead is applied to production on the basis of direct labor hours. The predetermined overhead rate is based on the information given for the rest of the year ($28, 160 in estimated overhead and 2, 560 hours estimated DLH). The 100 bookcases are completed and moved to finished goods storage. Since this is the only job started and completed during the month, all manufacturing costs should be recorded to the Finished Goods Inventory account. Of the 100 book cases produced, 60 were sold on account in the Goodwood Collections store and to other unfinished retail stores throughout the state at a price of $180 per bookcase. This was the only job that was started and finished during the month. Prepare journal entries to record the above transactions in the appropriate place in the General Journal in packet 2. Post the entries you recorded to the T-accounts in Packet 2. Note that you need only post T-accounts listed in Packet 2. Examine the balance in the Manufacturing Overhead account and prepare a journal entry to close any balance in the Manufacturing Overhead account to the Cos, of Goods Sold account. Post the entry to the T-accounts in packet 2. Prepare a Partial income statement in the space provided in Packet 2 for ONLY the 60 bookcases sold at the end of the month listing ONLY sales, cost of goods sold, and gross profit.

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