Reference no: EM132213240

Question: Forest Components makes aircraft parts. The following transactions occurred in July: Purchased $16,920 of materials on account. Issued $16,860 in direct materials to the production department. Issued $1,220 of supplies from the materials inventory. Paid for the materials purchased in transaction (1) using cash. Returned $2,150 of the materials issued to production in (2) to the materials inventory. Direct labor employees earned $32,400, which was paid in cash. Paid $17,260 for miscellaneous items for the manufacturing plant. Accounts Payable was credited. Recognized depreciation on manufacturing plant of $36,800. Applied manufacturing overhead for the month. Forest uses normal costing. It applies overhead on the basis of direct labor costs using an annual, predetermined rate. At the beginning of the year, management estimated that direct labor costs for the year would be $434,500. Estimated overhead for the year was $395,395. The following balances appeared in the inventory accounts of Forest Components for July:

Beginning Ending Materials Inventory  $ 12,400

Work-in-Process Inventory  10,650

Finished Goods Inventory $ 2,740 6,920

Cost of Goods Sold  73,900

Required: a. Prepare journal entries to record these transactions. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

b. Prepare T-accounts to show the flow of costs during the period from Materials Inventory through Cost of Goods Sold.