Reference no: EM131030232
JOB ORDER COST ACCOUNTING PROJECT-
Custom Order Production Company, Inc. began operations on January 2, 2016. Custom Order uses a general journal, a general ledger containing control accounts, and separate job cost sheets within the work in process inventory subsidiary ledger and separate finished product cost sheets within the finished goods inventory subsidiary ledger. Material and factory payroll usage throughout each month is analyzed, journalized, and posted to the general ledger and job cost sheets at month-end. Also at month-end, manufacturing overhead is applied and posted to all jobs at a rate of 160% of direct labor costs. Direct and indirect material purchases and usages flow through the material inventory control account. Direct and indirect labor cash payments and usage flow through the factory payroll payable account. The following transactions were completed during January:
January 2 - Sold 1,000 shares of $10 par value common stock for cash, $500,000.
January 2 - Issued a 6%, one-year note payable for purchase of factory plant assets, $250,000.
January 4 - Paid for a one-year factory insurance policy, $15,000.
January 5 - Purchased materials on account, $215,100.
January 10 - Paid various manufacturing overhead costs, $97,175.
January 15 - Paid the semimonthly factory payroll, $88,400.
January 18 - Paid various manufacturing overhead costs, $71,350.
January 22 - Paid selling and general administrative expenses, $27,650.
January 31 - Paid the semimonthly factory payroll, $91,200.
January 31 - An analysis of direct matrial usage and direct labor for January indicates the following distribution:
|
Job
|
Direct Materials
|
Direct Labor
|
|
1
|
$22,400
|
$52,700
|
|
2
|
12,300
|
27,200
|
|
3
|
29,100
|
36,900
|
|
4
|
17,900
|
55,500
|
|
5
|
11,600
|
31,100
|
|
6
|
7,100
|
14,800
|
January 31 - Indirect material usage - $17,200 Record 1 Journal Entry
January 31 - Indirect labor usage - $16,000 Record I Journal Entry
January 31 - Jobs 2, 4, 5, and 6 were completed and transferred from work in process inventory to finished goods inventory respectively as Products Red, Blue, Pink, and Gray - Record 1 Journal Entry.
January 31 - Sold Product Red on account for $215,000.
January 31 - Sold Product Pink on account for $175,100.
January 31- Recorded accrued federal income tax expense of $74,786.
January 31 - Declared a cash dividend of $2.50 per share to be paid February 15, 2016.
January 31 - Recorded accrued interest expense for one month on the 6% note payable.
January 31 - Recorded the following additional factory overhead:
Depreciation on factory building, $75,000; depreciation on factory equipment, $31,900; usage of prepaid factory insurance, $1,250; and accrual of factory property taxes payable, $38,100 - Record separate journal entry for each item.
January 31 - Closed-out any remaining balance in the Manufacturing Overhead Control account to the Cost of Goods Sold account.
The following accounts are used in the general ledger:
- Cash - Checking
- Accounts Receivable
- Factory Pre-Paid Insurance
- Material Inventory (Control)
- Work in Process Inventory (Control)
- Finished Goods Inventory (Control)
- Manufacturing Overhead (Control)
- Factory Plant Assets
- Accumulated Depreciation
- Accounts Payable
- Notes Payable
- Factory Payroll Payable (Direct Labor)
- Factory Property Taxes Payable
- Interest Payable
- Income Taxes Payable
- Dividends Payable
- Common Stock
- Additional Paid in Capital - Common Stock
- Retained Earnings
- Dividends
- Sales Revenue
- Cost of Goods Sold
- Selling & Administrative Expenses
- Interest Expense
- Income Tax Expense
REQUIRED:
Using the working papers supplied:
1. Record all January transactions in the general journal and post to the general ledger, work in process inventory and finished goods inventory subsidiary ledgers. Skip a line between each journal entry. Omit journal entry explanations.
2. Calculate and record the ending balances of all general ledger and subsidiary ledger accounts.
3. Prepare the Schedule of Work in Process Inventory by job number and the Schedule of Finished Goods Inventory by product name - make sure the balance of each schedule agrees with the general ledger control account balance.
4. Prepare the adjusted trial balance as of January 31, 2016.
5. Prepare the Schedule of the Cost of Finished Goods Manufactured and the Income Statement for the month ended January 31, 2016. See examples in textbook on pp. 736-737 (17th edition).