K&J Bakery Inc. opened for business on January 1, 20X1 as planned. During the mo
ID: 2531806 • Letter: K
Question
K&J Bakery Inc. opened for business on January 1, 20X1 as planned. During the month of January, the business purchased and used 200 pounds of flour, 200 pounds of sugar, 67 dozen eggs and had 5 bad eggs to dispose of during the month, 20 baking soda boxes, 200 pounds of butter, 100 pounds of raisons, 50 bottles of run, and the other ingredients (one box of each for a total of four) all from one supplier on account. Manufacturing overhead is applied to production at $4 per cake. Keisha purchased the oven using the startup capital and paid all salaries. Her nieces worked 300 hours in total for the month. January was a very good month for the bakery since it baked 200 cakes and sold all for cash. The average selling price was $50 per cake. All manufacturing overhead is closed out at month end. The supplier was paid at month end. Required: Document K&J Bakery Inc January transactions using journal entries (round all calculations to 2 decimal places). All other costs such as utilities, must be accounted for in the journal entries (assume such transactions where applicable, are paid in cash).
Explanation / Answer
Income Statement
K&J Bakery Inc.
Since Rates Not Available in Question Amount Derived based on Assumed Rates
Items
Rate ($)
QTY or HRS
Amount ($)
flour
5
200
1,000.00
Sugar
4
200
800.00
67 dozen eggs
10
67
670.00
baking Soda
5
20
100.00
butter
20
200
4,000.00
riason
6
100
600.00
run
15
50
750.00
A) Material
7,920.00
Manufacturing OH
4
200
800.00
Wages (assumed only his Nieces is working)
5
200
1,000.00
Depreciation of Oven for January ( Assumed Cost $100 life 5 years ) =600/(5*12)
10.00
Total Cost
9,730.00
Sales
50
200
10,000.00
Profit
$ 270.00
Journal Entries in the books of
K&J Bakery Inc.
DATE
PARTICULAR
DEBIT ($)
CREDIT ($)
1
Purchase of Material
Flour
1000
SUGAR
800
Eggs
670
Baking Soda
100
Butter
4000
RIASON
600
RUN
750
To Cash
7920
2
Payment of Manufacturing OH
Manufacturing Overhead
200
To Cash
200
3
Wages Payment
Wages
200
To Cash
200
4
Depreciation Charged on Oven
Depreciation
10
To Oven (Fixed Assets)
5
Sale of Cakes
Cash
10000
To Sales
10000
Income Statement
K&J Bakery Inc.
Since Rates Not Available in Question Amount Derived based on Assumed Rates
Items
Rate ($)
QTY or HRS
Amount ($)
flour
5
200
1,000.00
Sugar
4
200
800.00
67 dozen eggs
10
67
670.00
baking Soda
5
20
100.00
butter
20
200
4,000.00
riason
6
100
600.00
run
15
50
750.00
A) Material
7,920.00
Manufacturing OH
4
200
800.00
Wages (assumed only his Nieces is working)
5
200
1,000.00
Depreciation of Oven for January ( Assumed Cost $100 life 5 years ) =600/(5*12)
10.00
Total Cost
9,730.00
Sales
50
200
10,000.00
Profit
$ 270.00
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