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unititled tolder Google Orand Valeyeniversity Facebook oube E ESPN Untappd-Drink Secialy ACL Ebay MOB Wiipedia www.concertarchives.ong Comcast Help Save& Exit Subr Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sels its birdcages through an extensive network of street vendors who receive commissions on their sales The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost Its predetemined overhead rate is based on a cost formula that estimated $330,000 of manufacturing overhead for an estimated activity level of $200,000 direct labor dollars At the beginning of the yeat the inventory belances were as follows During the year, the following transactions were completed a Raw maberials purchased for cash, $275,000 o Raw materials used in production $280,000 materials costing $220,000 were charged directly to jobs: the remaining materials were indirect c Cash paid to employees as follows d. Cash paid for rent during the year was $18,000 ($13.000 of this amoune related to factory operations, and the remainder related so seling and administrative activibies e. Cash paid for utity costs in the factory $57000 t Cash paid for advertisina. $140000

Solution

Predetermined Mfg. OH rate Estimated Mfg.OH/Total $ direct labor cost ie. 330000/200000= 1.65 times of Direct labor cost Account Title Debit Credit a. Raw Materials 275000 Cash 275000 b. Work In Process 220000 Manufacturing OH 60000 Raw materials 280000 c. Work In Process 180000 Manufacturing OH 72000 Sales commissions 63000 Salaries expense 90000 Cash 405000 d. Manufacturing OH 13000 Rent expense 5000 Cash 18000 e. Manufacturing OH 57000 Cash 57000 f. Advertising expense 140000 Cash 140000 g. Manufacturing OH 88000 Depreciation 12000 Accumulated depreciation-Equipment 100000 h. Work in process 297000 Manufacturing OH 297000 (180000*1.65) i. Finished goods 675000 Work in process 675000 i. Cash 1250000 Sales revenue 1250000 COGS 700000 Finished Goods 700000 4197000 4197000 Closing entry Manufacturing OH 7000 COGS 7000 Over-applied OH credited To COGS) Net ledger Balances LEDGER ACCOUNTS Debit Credit Debit Credit g. Accumulated depreciation-Equipment 100000 100000 f. Advertising expense 140000 140000 a. Cash 275000 c. Cash 405000 d. Cash 18000 e. Cash 57000 f. Cash 140000 i. Cash 1250000 355000 i COGS 700000 Manufacturing OH(Over applied) 7000 693000 g. Depreciation 12000 12000 Opening balance 40000 i. Finished goods 675000 i Finished Goods 700000 15000 b. Manufacturing OH 60000 c. Manufacturing OH 72000 d. Manufacturing OH 13000 e. Manufacturing OH 57000 g. Manufacturing OH 88000 h. Manufacturing OH 297000 COGS 7000 0 Opening balance 25000 b. Raw materials 280000 a. Raw Materials 275000 20000 d. Rent expense 5000 c. Salaries expense 90000 c. Sales commissions 63000 i. Sales revenue 1250000 Opening balance 10000 b. Work In Process 220000 c. Work In Process 180000 h. Work in process 297000 i. Work in process 675000 32000 TRIAL BALANCE Accumulated depreciation-Equipment 100000 Advertising expense 140000 Cash 355000 COGS 693000 Depreciation 12000 Finished Goods 15000 Raw Materials 20000 Rent expense 5000 Salaries expense 90000 Sales commissions 63000 Sales revenue 1250000 Work in process 32000 Income statement Sales revenue 1250000 Less:COGS 693000 Gross Margin 557000 Less: Operating expenses: Advertising expense 140000 Depreciation 12000 Rent expense 5000 Salaries expense 90000 Sales commissions 63000 310000 Net operating income 247000 Closing balances of Inventories Finished Goods 15000 Raw Materials 20000 Work in process 32000