The following items appear in the post-closing trial balance for March 1 and on
ID: 2451185 • Letter: T
Question
The following items appear in the post-closing trial balance for March 1 and on the adjusted, preclosing trial balance at March 31 of Price Company. Price Company prepares financial statements monthly.
1-Mar 31-Mar Raw materials $10,000 $ 8,000 Work in process 15,000 25,000 Finished goods inventory 10,000 14,000 Sales (Cr balance) - 600,000 Allowance for uncollectible accounts (Cr balance) 6,000 10,000 During the month of March, Price Company incurred the following costs: Raw materials used in production $130,000 Labor costs used in production 80,000 Labor costs used in administration and marketing 10,000 Factory overhead costs for production 60,000 Office administration costs, other than labor 12,000 Accounts receivable written off as uncollectible 9,000 Required: (USE T -accounts and formulas to justify your answers) a. What was the acquisition cost of raw materials purchased during the month of March? b. What was the total cost of goods completed during the month of March? c. What was the Cost of Goods Sold during the month of March? d. What was the Uncollectible account expense for the month of March? e. What was the Income (before taxes) for the month of March? f. Explain briefly why no amount for sales appears in the March 1 trial balance.Explanation / Answer
Answer:a Acquision cost=Raw materials used in production+ending Raw materials-opening Raw materials
=130000+8000-10000=128000
Answer:b Total cost=Purchase raw material+Direct labor+Factory overhead cost
=128000+80000+10000+60000+12000=290000
Answer:c COG manufactured =Beg. WIP+Total cost-Closing WIP
=15000+290000-25000=280000
COGS=Opening Finished goods+COGM-closing FG
=10000+280000-14000
=276000
Answer:d Uncollectiable A/C Expe=10000+9000-6000=13000
Answer:e Income= Sales-COGS- uncollectiable A/C Exp
=600000-276000-13000
=3110000
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