Principles of Cost Accounting
Principles of Cost Accounting
17th Edition
ISBN: 9781305087408
Author: Edward J. Vanderbeck, Maria R. Mitchell
Publisher: Cengage Learning
bartleby

Concept explainers

bartleby

Videos

Textbook Question
Book Icon
Chapter 1, Problem 6P

The post-closing trial balance of Custer Products, Inc. on April 30 is reproduced as follows:

Chapter 1, Problem 6P, The post-closing trial balance of Custer Products, Inc. on April 30 is reproduced as follows: During

During May, the following transactions took place:

  1. a. Purchased raw materials at a cost of $45,000 and general factory supplies at a cost of $13,000 on account (recorded materials and supplies in the materials account).
  2. b. Issued raw materials to be used in production, costing $47,000, and miscellaneous factory supplies costing $15,000.
  3. c. Recorded the payroll and the payments to employees as follows: factory wages (including $12,000 indirect labor), $41,000; and selling and administrative salaries, $7,000. Additional account titles include Wages Payable and Payroll. (Ignore payroll withholdings and deductions.)
  4. d. Distributed the payroll in (c).
  5. e. Recognized depreciation for the month at an annual rate of 5% on the building, 10% on the factory equipment, and 20% on the office equipment. The sales and administrative staff uses approximately one-fifth of the building for its offices.
  6. f. Incurred other expenses totaling $11,000. One-fourth of this amount is allocable to the office function.
  7. g. Transferred total factory overhead costs to Work in Process.
  8. h. Completed and transferred goods with a total cost of $91,000 to the finished goods storeroom.
  9. i. Sold goods costing $188,000 for $362,000. (Assume that all sales were made on account.)
  10. j. Collected accounts receivable in the amount of $345,000.
  11. k. Paid accounts payable totaling $158,000.

Required:

  1. 1. Prepare journal entries to record the transactions.
  2. 2. Set up T-accounts. Post the beginning trial balance and the journal entries prepared in (1) to the accounts and determine the balances in the accounts on May 31.
  3. 3. Prepare a statement of cost of goods manufactured, an income statement, and a balance sheet. (Round amounts to the nearest whole dollar.)

1.

Expert Solution
Check Mark
To determine

Prepare journal entry to record the given transactions.

Explanation of Solution

Prepare journal entry to record the given transactions.

DateAccounts title and explanationDebit ($)Credit ($)
aMaterials58,000 
 Accounts payable 58,000
 (To record materials purchased on account)  
    
bWork in Process47,000 
 Factory overhead15,000 
 Materials 62,000
 (To record issue of direct materials and indirect materials)  
    
cPayroll48,000 
     Wages Payable 48,000
 (To record factory wages and salaries)  
 Wages Payable  
       Cash  
 (To record the payment of factory wages and salaries)  
    
dWork in Process ($41,000$12,000)29,000 
 Factory overhead12,000 
 Selling and Administrative Expenses (salaries)7,000 
 Payroll 48,000
 (To record the distribution of payroll)  
    
eFactory overhead (Depreciation of building) (1)1,600 
 Factory overhead (Depreciation of factory equipment) (3)1,833 
 Selling and Administrative Expenses (Depreciation of building) (2)400 
 Selling and Administrative Expenses (Depreciation of office equipment) (4)1,000 
        Accumulated Depreciation - Building 2,000
        Accumulated Depreciation – Factory Equipment 1,833
        Accumulated Depreciation – Office Equipment 1,000
 (To record depreciation on building, factory equipment, and office equipment)  
    
fFactory overhead(miscellaneous) ($11,000×34)8,250 
 Selling and Administrative expenses (miscellaneous) ($11,000×14)2,750 
    Accounts payable 11,000
 (To record factory overhead costs and selling and administrative expenses on account)  
    
g.Work in Process38,683 
          Factory Overhead 38,683
 (To record transfer of factory overhead to Work-in process)  
    
h.Finished Goods91,000 
        Work in Process 91,000
 (To record the transfer of cost of completed work to finished goods)  
    
iAccounts receivable362,000 
        Sales 362,000
 (To record the sale made on account)  
    
 Cost of goods sold188,000 
        Finished goods 188,000
 (To record the cost of goods sold)  
    
j.Cash345,000 
    Accounts Receivable 345,000
 (To record the receipt on accounts receivable)  
    
kAccounts Payable  
     Cash  
 (To record the payment of accounts payable)  

Table (1)

Working note 1: Calculate depreciation on buildings under factory overhead.

Depreciation on buildings under factory overhead = $480,000×5%12×45=$1,600

Working note 2: Calculate depreciation on buildings under selling and administrative expenses.

Depreciation on buildings under selling and administrative expenses = $480,000×5%12×15=$400

Working note 3: Calculate depreciation on factory equipment under factory overhead.

Depreciation on factory equipment under factory overhead = $220,000×10%12=$1,833

Working note 4: Calculate depreciation on factory equipment under selling and administrative expenses.

Depreciation on factory on equipment under selling and administrative expenses )$60,000×20%12=$1,000

2

Expert Solution
Check Mark
To determine

Prepare t-account and post the beginning trial balance and journal entries amount to the particular account and determine the ending balance in the account.

Explanation of Solution

Prepare t-account and post the beginning trial balance and journal entries amount to the particular account and determine the ending balance in the account.

Cash

Beginning balance

25,000(c)48,000
(j)345,000(k)158,000
Ending Balance164,000
Accounts Receivable

Beginning balance

65,000(j)345,000
(i)362,000
Ending Balance164,000
Finished Goods

Beginning balance

120,000(i)188,000
(h)91,000
Ending Balance23,000
Work in Process

Beginning balance

35,000(i)188,000
(h)91,000
Ending Balance23,000
Materials

Beginning balance

18,000(b)62,000
(a)58,000
Ending Balance14,000
Building

Beginning balance

480,000
Ending Balance480,000
Accumulated depreciation-Building
  

Beginning balance

 (e)   

72,000

2,000

 Ending Balance                74,000

Factory equipment

Beginning balance

220,000
Ending Balance220,000
Accumulated depreciation- Factory equipment
  

Beginning balance

 (e)   

66,000

1,833

 Ending Balance                67,833

Office equipment

Beginning balance

60,000
Ending Balance60,000
Accumulated depreciation- Office equipment
  

Beginning balance

 (e)   

36,000

1,000

 Ending Balance                37,000
Accounts Payable

(j)

158,000

Beginning balance

(a)

(f)

92,000

58,000

11,000

  Ending Balance14,000
Payroll
 

Beginning balance

 0
(c)48,000(d)48,000
Ending Balance0
Wages payable
 

Beginning balance

 0
(c)48,000(c)48,000
Ending Balance0
Capital Stock
 

Beginning balance

 250,000
Ending Balance250,000
Retained Earnings
 

Beginning balance

 504,000
Ending Balance504,000
Sales
 (i)362,000
Cost of goods sold
(i)188,000 
Factory Overhead

(b)

(d)

(e)

(e)

(f)

15,000

12,000

1,600

1,833

8,250

(g) 38,683
  
Selling and administrative expenses

(d)

(e)

(e)

(f)

7,000

400

1,000

2,750

 
Ending Balance 11,150

3.

Expert Solution
Check Mark
To determine

Prepare Incorporation C’s statement of cost of goods manufactured, income statement, and balance sheet.

Explanation of Solution

Prepare Incorporation C’s statement of cost of goods manufactured for the month ended May 31, 2016.

Incorporation C
Statement of cost of goods manufactured
For the month ended May 31, 2016
ParticularsAmount ($)Amount ($)
Direct materials:  
Inventory, May 118,000 
Add: Purchases58,000 
Total cost of available materials76,000 
Less: Inventory, May 3114,000 
Cost of materials used62,000 
Less: Indirect materials used15,000 
Cost of direct materials used in production 47,000
Direct labor 29,000
Factory  Overhead:  
Indirect materials15,000 
Indirect labor12,000 
Depreciation of building1,600 
Depreciation of factory equipment1,833 
Miscellaneous expenses8,250 
Total factory overhead 38,683
Total manufacturing cost 114,683
Add: Work in process inventory, May 1 35,000
  149,683
Less: work in process inventory, May 31 58,683
Cost of goods sold manufactured 91,000

Table (2)

Prepare Incorporation C’s income statement for the month ended May 31, 2016.

Incorporation C
Income statement
For the month ended May 31, 2016
ParticularsAmount ($)Amount ($)
Sales 362,000
Cost of goods sold:  
Finished goods inventory, May 1120,000 
Add: Cost of goods manufactured91,000 
Goods available for sale211,000 
Less: Finished goods inventory , May 3123,000188,000
Gross profit on sales 174,000
Selling and administrative expenses 11,150
Net income 162,850

Table (3)

Prepare Incorporation C’s balance sheet at May 31, 2016.

Incorporation C
Balance Sheet
At May 31, 2016
ParticularsAmount ($) Amount ($)
Current Assets:    
Cash  164,000
Accounts receivable  82,000
Inventories:   
Finished goods 23,000 
Work in process 58,683 
Materials 14,00095,683
Total current assets 341,683
Plant and equipment: 
Building480,000 
Less: Accumulated depreciation74,000406,000 
Factory equipment220,000  
Less: Accumulated depreciation67,833152,167 
Office equipment60,000  
Less: Accumulated depreciation37,00023,000 
Total plant and equipment  581,167
Total assets   922,850
    
Liabilities and stockholder’s equity
Current liabilities:   
Accounts payable  6,000
Stockholder’s equity:   
Capital stock250,000  
Retained earnings (5)666,850  
Total Stockholder’s equity   916,850
Total liabilities and stockholder’s equity  922,850

Table (4)

Working note 5:

Calculate the amount of retained earnings.

Retained earnings = Beginning retained earnings balance + Net income for May=$504,000 +$162,850=$666,850

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
The following financial information about the manufacturing plant of Continental Company for the year-to-date and the month of July appears on the company's records: Materials inventory, June 30 Work-in-process inventory, June 30 Finished goods inventory, June 30 Cost of goods sold through June 30 Accounts payable (materials suppliers), June 30 Manufacturing overhead through June 30 Payroll payable, June 30 Withholding and other payroll liabilities, June 30 Overhead applied through June 30 A count of the inventories on hand July 31 shows the following: Materials inventory Work-in-process inventory Finished goods inventory $ 44,500 ? 42,000 • Manufacturing overhead incurred through July was $233,900. Cost of goods sold through July 31 was $417,800. Interviews with various plant administrative employees August 1 reveal some additional information: • The company currently owes materials suppliers $54,600. • The company paid suppliers $40,800 cash during July. Plant payroll during July…
The following financial information about the manufacturing plant of Continental Company for the year-to-date and the month of July appears on the company's records: Materials inventory, June 30 Work-in-process inventory, June 30 Finished goods inventory, June 30 Cost of goods sold through June 30 Accounts payable (materials suppliers), June 30 Manufacturing overhead through June 30 Payroll payable, June 30 Withholding and other payroll liabilities, June 30 Overhead applied through June 30 A count of the inventories on hand July 31 shows the following: $ 42,500 ? 40,000 Materials inventory Work-in-process inventory Finished goods inventory Interviews with various plant administrative employees August 1 reveal some additional information: • The company currently owes materials suppliers $52,600. • The company paid suppliers $38,800 cash during July. • Plant payroll during July totaled $82,500, of which $16,300 was for indirect labor. • Manufacturing overhead incurred through July was…
The following data summarize the operations during the year. Prepare a journal entry for eachtransaction.A. Purchase of raw materials on account: $3,000B. Raw materials used by Job 1: $500C. Raw materials used as indirect materials: $100D. Direct labor for Job 1: $300E. Indirect labor incurred: $50F. Factory utilities incurred on account: $700G. Adjusting entry for factory depreciation: $250H. Manufacturing overhead applied as percent of direct labor: 200%I. Job 1 is transferred to finished goodsJ. Job 1 is sold: $3,000K. Manufacturing overhead is over applied: $100

Chapter 1 Solutions

Principles of Cost Accounting

Ch. 1 - Define responsibility accounting.Ch. 1 - What criteria must be met for a unit of activity...Ch. 1 - Prob. 13QCh. 1 - Prob. 14QCh. 1 - What actions should a CMA take when the...Ch. 1 - Prob. 16QCh. 1 - Prob. 17QCh. 1 - Prob. 18QCh. 1 - How is cost accounting related to: financial...Ch. 1 - How does the computation of cost of goods sold for...Ch. 1 - How would you describe the following accounts:...Ch. 1 - Prob. 22QCh. 1 - What is the difference between a perpetual...Ch. 1 - What are the basic elements of production cost?Ch. 1 - How would you define the following costs: direct...Ch. 1 - Why have companies such as Harley-Davidson stopped...Ch. 1 - Distinguish prime cost from conversion cost. Does...Ch. 1 - In what way does the accounting treatment of...Ch. 1 - How do cost of goods sold and cost of goods...Ch. 1 - How are nonfactory costs and costs that benefit...Ch. 1 - What is a mark-on percentage?Ch. 1 - Prob. 32QCh. 1 - When is process costing appropriate, and what...Ch. 1 - What are the advantages of accumulating costs by...Ch. 1 - What is a job cost sheet, and why is it useful?Ch. 1 - What are standard costs, and what is the purpose...Ch. 1 - If the factory operations and selling and...Ch. 1 - Study the performance report for Barbaras Bistro...Ch. 1 - Note that Barbaras Bistro in Figure 1-2 prepares...Ch. 1 - Cost of goods soldmerchandiser The following data...Ch. 1 - The following data were taken from the general...Ch. 1 - Prob. 5ECh. 1 - Explain in narrative form the flow of direct...Ch. 1 - The following data are taken from the general...Ch. 1 - The following data are taken from the general...Ch. 1 - The following inventory data relate to Edwards,...Ch. 1 - The following is a list of manufacturing costs...Ch. 1 - Leen Production Co. uses the job order cost system...Ch. 1 - Gerken Fabrication Inc. uses the job order cost...Ch. 1 - Cycle Specialists manufactures goods on a job...Ch. 1 - Prepare a performance report for the dining room...Ch. 1 - The following data were taken from the general...Ch. 1 - The following data were taken from the general...Ch. 1 - Statement of cost of goods manufactured; income...Ch. 1 - The adjusted trial balance for Appleton...Ch. 1 - The post-closing trial balance of Custer Products,...Ch. 1 - Selected account balances and transactions of...Ch. 1 - OReilly Manufacturing Co.s cost of goods sold for...Ch. 1 - Glasson Manufacturing Co. produces only one...Ch. 1 - Sultan, Inc. manufactures goods to special order...Ch. 1 - Spokane Production Co. obtained the following...Ch. 1 - Bangor Products Co. obtained the following...Ch. 1 - Potomac Automotive Co. manufactures engines that...Ch. 1 - Required Ethics Mary Branson is the Division...
Knowledge Booster
Background pattern image
Accounting
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Principles of Cost Accounting
Accounting
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Cengage Learning
Text book image
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Text book image
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Cost Accounting - Definition, Purpose, Types, How it Works?; Author: WallStreetMojo;https://www.youtube.com/watch?v=AwrwUf8vYEY;License: Standard YouTube License, CC-BY