1 A selected list of accounts used by Firenze Flooring follo

1. A selected list of accounts used by Firenze Flooring follows: Cash Accounts Receivable Raw Materials Inventory Work In Process Inventory Finished Goods Inventory Accounts or Wages Payable Factory Labor Manufacturing Overhead Cost of Goods Sold Sales Revenue Firenze Flooring uses a job order system and maintains perpetual inventory records. Instructions: Place the appropriate account in the columns indicating the appropriate account(s) to be debited and credited for the transactions listed below Transaction Account(s) Debited Account[s) Credited a) Raw materials were purchased on account. b) Factory labor was incurred and is due to employees. c) Direct materials were issued to Work in Process. d) Paid for raw materials purchased previously on account e) Raw materials were issued to the production facility to be used indirectly during the production process. Recognized direct labor and supervisor salaries used Overhead cost was applied to production based on a f g) predetermined overhead rate of $8 per labor hour Production that was completed and transferred to Finished Goods. h) i) Goods with a production cost of $80,000 were sold for $105,000 on account. (Hint: There will be two accounts debited and two accounts credited)

Solution

Ans. Transaction Account(s) Debited Account(s) Credited a) Raw material were purchased on cost. Raw Material Inventory Accounts or Wages Payable b) Factory labour was incurred and is due to employees. Factory Labour Accounts or Wages Payable c) Direct materials were issued to Work in Progress. Work in Process Inventory Raw Material Inventory d) Paid for raw material purchased previously on account. Accounts or Wages Payable Cash e) Raw material were issued to the production facility to be used indirectly during the production process. Manufacturing Overhead Raw Material Inventory f) Recognized direct labour and supervisor salaries used. Work in Process Inventory Factory Labour g) Overhead cost was applied to production based on a predetermined overhead rate of $ per labour hour. Work in Process Inventory Manufacturing Overhead h) Production that was completed and transferred to finished goods. Finished Goods Inventory Work in Process Inventory i) Goods with a production cost of $80,000 weresold for $105,000 on account. (Hint: There will be two accounts debited and two accounts credited). Accounts Receivable and Cost of Goods Sold Sales Revenue and Finished Goods Inventory