Eminence Corporation makes rocking chairs. The chairs move through two departmen
ID: 2573620 • Letter: E
Question
Eminence Corporation makes rocking chairs. The chairs move through two departments during production. Lumber is cut into chair parts in the cutting department, which transfers the parts to the assembly department for completion. The company sells the unfinished chairs to hobby shops.
The list of beginning balances are given below:
The transactions for the second year of operation (2019) are described here. (Assume that all transactions are cash transactions unless otherwise indicated.)
1) The company purchased $10,000 of direct raw materials and $650 of indirect materials. Indirect materials are capitalized in the Production Supplies account.
2) Materials totaling $7,250 were issued to the cutting department.
3) Labor cost was $23,500. Direct labor for the cutting and assembly departments was $11,000 and $10,000, respectively. Indirect labor costs were $2,500. (Note: Assume that sufficient cash is available when periodic payments are made. These amounts represent summary data for the entire year and are not presented in exact order of collection and payment.)
4) The predetermined overhead rate was $0.50 per direct labor dollar in each department.
5) Actual overhead costs other than indirect materials and indirect labor for the month were $7,300.
6) The cutting department transferred $15,500 of inventory to the assembly department.
7) The assembly department transferred $30,500 of inventory to finished goods.
8) The company sold inventory costing $17,500 for $32,000.
9) Selling and administrative expenses were $4,200.
10) At the end of 2019, $150 of production supplies was on hand.
11) Assume that over- or underapplied overhead is insignificant.
Required
A) Record the data in T-accounts.
B) Record the closing entry for over- or underapplied manufacturing overhead, assuming that the amount is insignificant.
C) Close the revenue and expense accounts.
D) Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2019.
Cash $ 24,000 Raw materials 8,000 Work in process cutting 9,500 Work in process assembly 11,500 Finished goods 2,000 Production supplies 100 Common stock 47,000 Retained earnings 8,100Explanation / Answer
Raw material Inventory Beg bal 8000 Accounts Payable 10000 Work In process_assembly 7250 enidng balance 10750 Work In process-Cutting Opening Balance 9500 Work In process_assembly 15500 Raw material Inventory 7250 Factory wages 11000 Manufacturing Overhead 5500 ending balance 17750 Work In process_assembly Opening Balance 11500 Finished Goods 30500 Factory wages 10000 Manufacturing Overhead 5000 Work In process-Cutting 15500 ending balance 11500 Wages payable Work In process-Cutting 11000 Work In process_assembly 10000 Manufacturing Overhead 2500 ending balance 23500 Manufacturing Overhead Production Supplies (100+650-150) 600 Work In process-Cutting 5500 Wages payable 2500 Work In process_assembly 5000 Cash/Accounts payable 7300 ending balance 100 Finished Goods Opening Balance 2000 Cost of Good sold 17500 Work In process_assembly 30500 Ending balance 15000 Cost of Good sold Finished Goods 17500 ans b Overapplied 100 Dr Cr Manufacturing overhead 100 Cost of good sold 100 ans c Sales 32000 Income Smmmary 32000 Income Summary 21600 Cost of Good sold 17400 Selling & administrative expenses 4200 Income Summary 10400 Retained eranings 10400 ans d Income Statement Sales 32000 less: cost of good sold 17400 Gross profit 14600 Less: selling & adm exp 4200 Net Income 10400
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