The manufacturing cost accounts of Varsity Manufacturing Co. provide the followi
ID: 2356574 • Letter: T
Question
The manufacturing cost accounts of Varsity Manufacturing Co. provide the following information for the year ended December 31, 2011: Inventories at the beginning and end of the year were as follows: 5. The total amount of inventory that should appear in the company's balance sheet at December 31, 2011 is: $115,000. Some other amount. $_____________ $85,000. $860,000. 6. The total manufacturing costs charged to the Work in Process Inventory account during 2011 amounted to: Some other amount. $_____________ $810,000. $820,000. $850,000.Explanation / Answer
a) Determine the amount of the ending inventory balance that would appear on the December 31, 2011, balance sheet. 15,040 / 4,600 = 3.27 Cost of each unit produced 4,600 - 3,680 = 920 Units remaining in inventory 920 x 3.27 = 3,008 Ending inventory Rounded b) Determine the amount of net income that would appear on the 2011 income statement. 55,200 Sales (3,680 x 15) - 12,032 Cost of Goods Sold (15,040 - 3,008) - 11,100 Administrative Salaries - 15,900 Production Personnel Wages - 1,900 Depreciation Expense, Office furniture (9,500 / 5) straight-line - 7,700 Depreciation Expense, Manufacturing Equipment [(33.900 - 3,100) / 4] Straight-line = 6,568 Net Income c) Determine the amount of retained earnings that would appear on the December 31, 2011, balance sheet. Same as the net income, 6,568 Stockholder's Equity would be 6,568 + 15,000 common stock = 21,568 d) Determine the amount of total assets that would appear on the December 31, 2011, balance sheet. This one doesn't make sense. The only cash that was taken in by the business was $15,000 for common stock and 55,200 for sales. If all the transactions were for cash, 9,500 and 33,900 were paid for office furniture and equipment, 11,100 and 15,900 for salaries and wages, and 15,040 for raw materials. That means there is a minus 15,240 for cash. Net fixed assets would be (9,500 + 33,900) - (1,900 + 7,700) = 33,800 And Inventory is 3,008
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