Problem:
The following trial balance was taken from the records of Jones
Cash $5,000
Raw materials inventory 750
Work in process inventory 1,200
Finished goods inventory 2,100
Property, plant, and equipment 7,500
Accumulated depreciation $3,000
Common stock 7,400
Retained earnings 6,150
Total $16,550 $16,550
Transactions for accounting period
1. Jones purchased $5,700 of direct raw materials and $300 of indirect raw materials on account. The indirect materials are capitalized in the production supplies account. Materials requisitions showed that $5,400 of direct raw materials had been used for production during the period. The use of indirect materials is determined at the end of the year by physically counting the supplies on hand.
2. By the end of the year, $5250 of the accounts payable had been paid in cash.
3. During the year direct labor amounted to 950 hours recorded in the wages payable account at $10.50 per hour.
4. By the end of the year, $9,000 of wages payable had been paid in cash.
5. At the beginning of the year, the company expected overhead cost for the period to be $6,300 and 1,000 direct labor hours to be worked. Overhead is allocated based on direct labor hours, which as indicated in #3 which amounted to 950 for the year.
6. Administrative and sales expenses amounted to $900 paid in cash.
7. Utilities and rent for production facilities amounted to $4,650 paid in cash.
8. Depreciation on the plant and equipment used in production amounted to $1,500.
9. Assume that $12,000 of goods were completed during the year.
10. Assume $12,750 of finished goods inventory was sold for $18,000 cash.
11. A count of production supplies revealed a balance of $89 on hand at the end of the year.
12. Any over or underapplied overhead is considered to be insignificant.
A. Open T-accounts with the beginning balances shown in the preceding list and record all transactions for the year including closing entries in the T-accounts. (note: Open new T-accounts as needed.)
B. Prepare a schedule for cost of goods sold, manufactured and sold, an income statement, and a balance sheet.