Morrison Company uses a job-order costing system to assign manufacturing costs t

Question

Morrison Company uses a job-order costing system to assign manufacturing costs to jobs. Its balance sheet on January 1 is as follows Morrison Company Balance Sheet January 1 Assets Cash Raw materials Work in process Finished goods Prepaid expenses Property, plant, and equipment (net) Total assets Liabilities and Stockholders' Equity Accounts payable Retained earnings Total liabilities and stockholders' equity $ 46,200 $15,300 7,550 25,800 48,650 2,225 126,000 s 223,075 $ 13,800 209,275 s 223,075 During January the company completed the following transactions a. Purchased raw materials on account, $85,600 b. Raw materials used in production, $96,800 ($77,000 was direct materials and $19,800 was indirect materials) C. Paid $182,350 of salaries and wages in cash ($95,200 was direct labor, $35,250 was indirect labor, and $51,900 was related to employees responsible for selling and administration) d. Various manufacturing overhead costs incurred (on account) to support production, $37650 e. Depreciation recorded on property, plant, and equipment, $64,400(70% related to manufacturing equipment and 30% related to assets that support selling and administration). f. Various selling expenses paid in cash, $41,900 g. Prepaid insurance expired during the month, $1,350 (80% related to production, and 20% related to selling and administration). h. Manufacturing overhead applied to production, $138,600 i. Cost of goods manufactured, $302,900 j. Cash sales to customers, $415,440. k. Cost of goods sold (unadjusted), $299,600. I Cash payments to creditors, $80,200 m. Underapplied or overapplied overhead _$ Required 1. Calculate the ending balances that would be reported on the company's balance sheet on January 31. (Hint: Be sure to calculate the underapplied or overapplied overhead and then account for its affect on the balance sheet.) 2. What is Morrison Company's net operating income for the month of January?

Explanation / Answer

MORRISON COMPANY

TRANSACTION ANALYSIS

for the month ended jan 31

(19320)     [64400*.30]

2)Net operating income =Retained earning at end -Retained earning at beginning

            = 211415-209225

       = 2190

MORRISON COMPANY

TRANSACTION ANALYSIS

for the month ended jan 31

Transactions cash Raw material work in process Finished goods manufacturing overhead prepaid expense PP E = Account payable Retained earning Beg bal 46200 15300 7500 25800 0 2225 126000 = 13800 209225 a 85600 85600 b (96800) 77000 19800 c (182350) 95200 35250 (51900) d 37650 37650 e 45080     [64400*70%) (64400)

(19320)     [64400*.30]

f (41900) (41900) g 1080    [1350*80%] (1350) (270) h 138600 (138600) ii (302900) 302900 j 415440 415440 k (299600) (299600) l (80200) (80200) m (260) (260)) Total 157190 4100 15400 29100 0 875 61600 = 56850 211415

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