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    Practice Problem 1 1. Journal Entries

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    john carlo tolentino
    This document contains journal entries, T-accounts, and an income statement for Sergeant's Manufacturing Company for the year ended December 31, 2012. It also contains practice problems involving job order costing calculations for multiple jobs using a predetermined overhead rate of 125% of direct labor costs. There was $8,000 of underapplied manufacturing overhead for the period that is closed out through an adjusting entry.

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    Practice Problem 1 1. Journal Entries

    Uploaded by

    john carlo tolentino
    26 views6 pages
    This document contains journal entries, T-accounts, and an income statement for Sergeant's Manufacturing Company for the year ended December 31, 2012. It also contains practice problems involving job order costing calculations for multiple jobs using a predetermined overhead rate of 125% of direct labor costs. There was $8,000 of underapplied manufacturing overhead for the period that is closed out through an adjusting entry.

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    Cost Accounting

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    This document contains journal entries, T-accounts, and an income statement for Sergeant's Manufacturing Company for the year ended December 31, 2012. It also contains practice problems involving job order costing calculations for multiple jobs using a predetermined overhead rate of 125% of direct labor costs. There was $8,000 of underapplied manufacturing overhead for the period that is closed out through an adjusting entry.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    26 views6 pages

    Practice Problem 1 1. Journal Entries

    Uploaded by

    john carlo tolentino
    This document contains journal entries, T-accounts, and an income statement for Sergeant's Manufacturing Company for the year ended December 31, 2012. It also contains practice problems involving job order costing calculations for multiple jobs using a predetermined overhead rate of 125% of direct labor costs. There was $8,000 of underapplied manufacturing overhead for the period that is closed out through an adjusting entry.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 6

    Tolentino, John Carlo C.

    BSMA – 2A
    PRACTICE PROBLEM 1
    1. Journal Entries
    a. Raw materials 820,000
    Accounts payable 820,000
    b. Work in process 720,000
    Manufacturing overhead 40,000
    Raw materials 760,000
    c. Work in process 150,000
    Manufacturing overhead 220,000
    Sales commission expenses 180,000
    Administrative sales expenses 400,000
    Salaries and wages payable 950,000
    d. Sales travel expenses 34,000
    Accounts payable 34,000
    e. Manufacturing overhead 86,000
    Accounts payable 86,000
    f. Advertising expenses 360,000
    Accounts payable 360,000
    g. Manufacturing overhead 566,000
    Depreciation expenses 140,000
    Prepaid insurance 700,000
    h. Manufacturing overhead 14,000
    Insurance expenses 6,000
    Prepaid insurance 20,000
    i. Work in process 960,000
    Manufacturing overhead 960,000
    j. Finished goods 1,800,000
    Work in process 1,800,000
    k. Accounts receivable 3,000,000
    Sales 3,000,000
    Cost of goods sold 1,740,000
    Finished goods 1,740,000
    2. T – Accounts

    Accounts Receivable
    (k) 3,000,000

    Raw Materials
    Bal. 40,000 (b) 760,000
    (a) 820,000
    Bal. 100,000

    Work in process
    Bal. 30,000 (j) 1,800,000
    (b) 720,000
    (c) 150,000
    (i) 960,000
    Bal. 60,000

    Finished goods
    Bal. 60,000 (k) 1,740,000
    (j) 1,800,000
    Bal. 120,000
    Prepaid Insurance
    (h) 20,000

    Accumulated Depreciation
    (g) 700,000
    Accounts Payable
    (a) 920,000
    (d) 34,000
    (e) 86,000
    (f) 360,000

    Salaries and Wages Payable


    (c) 950,000
    Manufacturing Overhead
    (b) 40,000 (i) 960,000
    (c) 220,000
    (e) 86,000
    (g) 560,000
    (h) 14,000
    Bal. 40,000

    Administrative Salary Expense


    (c) 400,000

    Sales Commissions Expenses


    (c) 180,000

    Advertising Expense
    (f) 360,000

    Depreciation Expense
    (g) 140,000

    Sales Travel Expense


    (h) 34,000

    Cost of Goods Sold


    (g) 140,000

    Insurance Expense
    (d) 6,000
    3. Income Statement
    Sergeant’s Manufacturing Company
    Income Statement
    For the Year Ended December 31, 2012
    Sales $3,000,000
    Less cost of goods sold ($1,740,000 - $40,000) 1,700,000
    Gross Profit 1,300,000
    Less selling and administrative expenses:
    Commissions expense $180,000
    Administrative salaries expense 400,000
    Sales travel expense 34,000
    Advertising expense 360,000
    Depreciation expense 140,000
    Insurance expense 6,000 1,120,000
    Net operating income $180,000

    PRACTICE PROBLEM 2
    PRACTICE PROBLEM 3

    A. $250,000 ÷ $200,000 = 125% of direct labor cost

    B. Job no. 3:
    Direct material $ 55,000
    Direct labor 80,000
    Manufacturing overhead ($80,000 x 125%) 100,000
    Total cost of job no. 3 $235,000

    C. Job nos. 1 and 2:


    Direct material ($145,000 + $320,000) $465,000
    Direct labor ($35,000 + $65,000) 100,000
    Manufacturing overhead ($100,000 x 125%) 125,000
    Total cost of job nos. 1 and 2 $690,000
    Sales revenue: $1,104,000 ($690,000 x 160%)

    D. Actual overhead $233,000


    Applied overhead: [($35,000 + $65,000 + $80,000) x 125%] 225,000
    Underapplied overhead $ 8,000

    E. Cost of Goods Sold 8,000


    Manufacturing Overhead 8,000

    F. No. For various reasons, businesses use a standardized application rate, including the fact
    that manufacturing overhead is not readily tracked to employment and goods. The
    predetermined rate is based on both overhead and cost driver assumptions, and cases where
    these amounts exactly correlate with actual experiences are uncommon. As a consequence, at
    the year-end, under-or over-applied overhead usually exists.

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