ACCT 226 E3-4

Sales for the year (all on account) totaled $1,200,000. These goods cost $800,000 according to their job cost sheets.

Accounts receivable 1,200,000 Sales 1,200,000 Cost of goods sold 800,000 Finished goods 800,000

Advertising costs were incurred, $136,000

Advertising expense 136,000 Accounts payable 136,000

Production orders that had cost $480,000 to complete according to their job cost sheets were shipped to customers during the month. These goods were sold on account at 25% above cost.

COGS 480,000 Finished goods 480,000

Production orders costing $520,000 according to their job cost sheets were completed during October and transferred to Finished Goods.

Finished goods 520,000 WIP 520,000

Cost of goods manufactured for the year, $770,000.

Finished goods 770,000 Work in process 770,000

Raw materials requisitioned for use in production (all direct materials), $185,000.

Work in process 185,000 Raw materials 185,000

Salary and wage costs were incurred: Direct labor (975 hours) $230,000 Indirect labor $90,000 Selling and administrative salaries $110,000

Work in process 230,000 Manufacturing overhead 90,000 Salaries expense 110,000 Salaries and wages payable 430,000

Depreciation recorded on factory equipment, $40,000.

MOH 40,000 Accumulated Depr 40,000

Rental cost incurred on buildings, $120,000 (85% related to factory operations, and the remainder related to selling and administrative facilities)

Manufacturing overhead 102,000 Rent expense 18,000 Accounts payable 120,000

Maintenance costs were incurred in the factory, $54,000

Manufacturing overhead 54,000 Accounts payable 54,000

Utility bills were incurred, $70,000 (90% related to factory operations, and the remainder related to selling and administrative activities)

Manufacturing overhead 63,000 Utilities expense 7,000 Accounts payable 70,000

Depreciation was recorded for the year, $95,000 (80% related to factory equipment, and the remainder related to selling and administrative equipment)

Manufacturing overhead 76,000 Depreciation expense 19,000 Accumulated depreciation 95,000

Raw materials purchased for use in production, $200,000.

Raw materials 200,000 Accounts payable 200,000

The company applies manufacturing overhead cost to production on the basis of $8 per machine-hour. A total of 30,000 machine-hours were recorded for October.

WIP (30,000x8) 240,000 MOH 240,000

Raw materials issued to production, $190,000 ($178,000 direct materials and $12,000 indirect materials).

WIP 178,000 MOH 12,000 Raw Materials inv 190,000

Direct labor cost incurred, $90,000; indirect labor cost incurred, $110,000.

WIP 90,000 MOH 110,000 Salaries & Wages payable 200,000