Inventory Accounts for a Manufacturing Company - The Fujita Company produces a s
ID: 2420654 • Letter: I
Question
Inventory Accounts for a Manufacturing Company - The Fujita Company produces a single product. Costs accumulated at the end of the period are as follows:
Raw material purchases
$54,000
Production supervisor’s salary
$20,000
Depreciation on manufacturing equipment
3,000
Shipping costs on units sold
43,500
Sales commissions
20,000
Materials used in production
81,400
Factory labor
36,000
Goods completed
115,000
Property tax on manufacturing equipment
3,500
Costs of units sold
150,000
Assume the beginning raw material inventory was $ 67,400, the beginning finished goods inventory was $123,500, and there was no beginning work in process inventory.
Compute the closing account balances of each of the three inventory accounts: Raw Materials, Work in Process, and Finished Goods.
Raw material purchases
$54,000
Production supervisor’s salary
$20,000
Depreciation on manufacturing equipment
3,000
Shipping costs on units sold
43,500
Sales commissions
20,000
Materials used in production
81,400
Factory labor
36,000
Goods completed
115,000
Property tax on manufacturing equipment
3,500
Costs of units sold
150,000
Explanation / Answer
a) Raw material ending balance = Beginning balance + Puchase - Material consumed
Raw material ending balance= 67400 + 54000 - 81400 = 40000
b) Work in process ending balance = Material consumed + Depreciation on manufacturing equipment+Factory labour+Property tax on manufacturing equipment+Production supervisor salary -Goods completed
=81,400+3,000+36,000+3,500+$20,000 - 115,000
Work in process ending balance =143,900-115,000 =$ 28,900
c)Finished Goods ending balance = Beginning balance +Goods completed - Costs of units sold
Finished Goods ending balance =$123,500+115,000-150,000 =$88,500
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