Gold Nest Company of Guandong, China, is a family-owned enterprise that makes bi
ID: 2545126 • Letter: G
Question
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the company’s transactions with customers, employees, and suppliers are conducted in cash; there is no credit.
The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $60,000 of manufacturing overhead for an estimated activity level of $40,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:
Raw materials requisitioned for use in production, $141,000 (materials costing $130,000 were charged directly to jobs; the remaining materials were indirect).
Rent for the year was $18,900 ($13,300 of this amount related to factory operations, and the remainder related to selling and administrative activities).
Depreciation recorded on equipment, $21,000. ($16,000 of this amount was on equipment used in factory operations; the remaining $5,000 was on equipment used in selling and administrative activities.)
Manufacturing overhead cost was applied to jobs, $?
Sales for the year totaled $503,000. The total cost to manufacture these goods according to their job cost sheets was $217,000.
Required:
Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations to 2 decimal places.)
Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these t-accounts (don’t forget to enter the beginning balances in your inventory accounts). (Round your intermediate calculations to 2 decimal places.)
Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations to 2 decimal places.)
Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the company’s transactions with customers, employees, and suppliers are conducted in cash; there is no credit.
1. Prepare journal entries to record the transactions for the year. If no entry is required for a transactionlevent, select "No journal entry required" in the first account field. Round your intermediate calculations to 2 decimal places.) View transaction list Journal entry worksheet Raw materials purchased for cash, $164,000 Note: Enter debits before credits. Transaction General Journal Debit Credit Raw materials 164.000 a. Record entry Clear entry View general journal 2. Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your joumal entries to these t-accounts (don't forget to enter the beginning balances in your inventory accounts). (Round your intermediate calculations to 2 decimal places.) Raw Materials Work in Process Beg. Bal Beg. Bal End. Bal End. Bal.Explanation / Answer
1.
Working:
Predetermined manufacturing overhead rate = Total estimated manufacturing overhead/Total estimated direct labor cost = $60000/$40000 = 150% of direct labor cost
2.
3-a. Overapplied
Manufacturing overhead incurred $227400 - Manufacturing overhead applied $241500 = Overheads overapplied $14100
3-b.
4.
Transaction General Journal Debit Credit a. Raw Materials 164000 Cash 164000 (To record materials purchased for cash) b. Work in process 130000 Manufacturing overheads 11000 Raw Materials 141000 (To record raw materials requisitioned) c. Work in process 161000 Manufacturing overheads 174100 Sales commission expense 28000 Administrative salaries expense 45000 Cash 408100 (To record cost of employee services incurred) d. Manufacturing overheads 13300 Rent expense 5600 Cash 18900 (To record rent incurred) e. Manufacturing overheads 13000 Cash 13000 (To record utilities costs incurred) f. Advertising expense 14000 Cash 14000 (To record advertising costs incurred) g. Manufacturing overheads 16000 Depreciation expense 5000 Accumulated depreciation-equipment 21000 (To record depreciation on equipment) h. Work in process 241500 Manufacturing overheads (150% x $161000) 241500 (To record manufacturing overhead applied to jobs) i. Finished goods 230000 Work in process 230000 (To record cost of jobs completed and transferred) j(1) Cash 503000 Sales Revenue 503000 (To record cash sales) j(2) Cost of goods sold 217000 Finished goods 217000 (To record cost of goods sold)Related Questions
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