Prepare a schedule of cost of goods manufactured and sold

Reference no: EM131983561

Problem

Stone 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:

Cash $ 77,200
Raw materials 21,000
Work in process cutting 17,000
Work in process assembly 21,500
Finished goods 4,000
Production supplies 300
Common stock 120,000
Retained earnings 21,000

The transactions for the second year of operation (2015) are described here. (Assume that all transactions are cash transactions unless otherwise indicated.)

1. The company purchased $41,000 of direct raw materials and $1,400 of indirect materials. Indirect materials are capitalized in the Production Supplies account.

2. Materials totaling $14,600 were issued to the cutting department.

3. Labor cost was $49,600. Direct labor for the cutting and assembly departments was $24,200 and $20,400, respectively. Indirect labor costs were $5,000. (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 $.50 per direct labor dollar in each department.

5. Actual overhead costs other than indirect materials and indirect labor for the month were $15,000.

6. The cutting department transferred $31,000 of inventory to the assembly department.

7. The assembly department transferred $61,000 of inventory to finished goods.

8. The company sold inventory costing $34,000 for $68,000.

9. Selling and administrative expenses were $7,400.

10. At the end of 2015, $400 of production supplies was on hand.

11. Assume that over- or underapplied overhead is insignificant.

Required:

a.b.&c. Record the data in T-accounts and the closing entry for over- or underapplied manufacturing overhead and 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 2015.

Reference no: EM131983561

Questions Cloud

Assess the effectiveness of data warehouses : Assess the effectiveness of data warehouses and database management systems in supporting specific business goals and decision making.

How would reconcile the financial data to confirm accuracy : FNSACC501 Provide financial and business performance information Assignment - Discuss how you would reconcile the financial data to confirm accuracy

Organization that sells a well-established product : Select a large, global organization that sells a well-established product or service. Explain in detail how the company has used the various forms of electronic

What is the margin of safety assuming slabs are budgeted : Stones Manufacturing, sells a marble slab for $1,000. Fixed costs are $30,000. What is the margin of safety assuming 75 slabs are budgeted?

Prepare a schedule of cost of goods manufactured and sold : Prepare a schedule of cost of goods manufactured and sold, an income statement, and a balance sheet for 2015.

Prepare an income statement for the month of march : StorSmart Company makes plastic organizing bins. Based on the above information, prepare an income statement for the month of March.

What is the golden circle : 1. What is the Golden Circle and how can businesses benefit from it?

Find what would be the balance reported for retained earning : If dividends of $78,900 were in arrears on preferred stock, what would be the balance reported for retained earnings?

What is the organizations primary cloud function : What "promises" of a secure cloud environment does the organization highlight? Are those considerations important to your company? Why?

User Account

All Pages