Vernon Manufacturing started in 2018 with the following account balances: Cash C

Question

Vernon Manufacturing started in 2018 with the following account balances: Cash Common stock Retained earnings Raw materials inventory Work in process inventory Finished goods inventory (380 unitse $5.95 each) $6,000 5,151 5,400 1,400 890 2,261 Transactions during 2018 1. Purchased $2,890 of raw materials with cash. 2. Transferred $3,770 of raw materials to the production department. 3. Incurred and paid cash for 240 hours of direct labor@ $15.30 per hour 4. Applied overhead costs to the Work in Process Inventory account. The predetermined overhead rate is $16.00 per direct labor hour. 5. Incurred actual overhead costs of $4,000 cash. 6. Completed work on 1,250 units for $6.00 per unit. 7. Paid $1,160 in selling and administrative expenses in cash. 8. Sold 1,250 units for $10,600 cash revenue (assume FIFO cost flow). 9 Vernon charges overapplied or underapplied overhead directly to Cost of Goods Sold

Explanation / Answer

Requirement 1)

Req 2)

Cost of goods manufactured and sold :

Req 3)

Income Statement :

Req 4)

Balance Sheet :

event cash M o/h RM WIP FG = CS RE Revenue - Expenses = Net Income BB 6000 1400 890 2261 = 5151 5400 1 -2890 2890 2 -3770 3770 3 -3672 3672 4 -3840 3840 5 -4000 4000 6 -7500 7500 7 -1160 = 1160 -1160 8a 10600 = 10600 +10600 8b -7481 = 7481 -7481 9    -160          = 160 -160 Total 4878 0 520 4672 2280 = 5151 5400 10600 8801 1799 G Total 12350 = 12350

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