Question:
Overview of general ledger relationships.
Budenmayer BV is a small machine shop that uses highly skilled labour and a job-costing system (using normal costing). The total debits and credits in certain accounts just before year-end are as follows:
30 December 2007
Total debits Total credits
|
Materials Control
|
€100 000
|
€70 000
|
|
Work-in-Progress Control
|
320 000
|
305 000
|
|
Manufacturing Department Overhead Control
|
85 000
|
-
|
|
Finished Goods Control
|
325 000
|
300 000
|
|
Cost of Goods Sold
|
300 000
|
-
|
|
Manufacturing Overhead Allocated
|
-
|
90 000
|
All materials purchased are for direct materials. Note that 'total debits' in the stock accounts would include beginning stock balances, if any.
The preceding accounts do not include the following:
a The manufacturing labour costs recapitulation for the 31 December working day: direct manufacturing labour, €5000 and indirect manufacturing labour, €1000.
b Miscellaneous manufacturing overhead incurred on 30 December and 31 December:
€1000.
Additional info r mation
? Manufacturing overhead has been allocated as a percentage of direct manufacturing labour costs through 30 December.
? Direct materials purchased during 2007 were €85 000.
? There were no returns to suppliers.
? Direct manufacturing labour costs during 2007 totalled €150 000, not including the
31 December working day described previously.
Required
1 Calculate the stock (31 December 2006) of Materials Control, Work-in-Progress Control and Finished Goods Control. Show T-accounts.
2 Prepare all adjusting and closing journal entries for the preceding accounts. Assume that all under- or overallocated manufacturing overhead is closed directly to Cost of Goods Sold.
3 Calculate the ending stock (31 December 2007), after adjustments and closing, of Materials Control, Work-in-Progress Control and Finished Goods Control.