Gold Nest Company of Guandong, China, is a family-owned enterprise that makes bi

Question

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the company’s transactions with customers, employees, and suppliers are conducted in cash; there is no credit.

    The company uses a job-order costing system in which overhead is applied to jobs on the basis of direct labor cost. Its predetermined overhead rate is based on a cost formula that estimated $67,500 of manufacturing overhead for an estimated activity level of $45,000 direct labor dollars. At the beginning of the year, the inventory balances were as follows:

Raw materials requisitioned for use in production, $141,000 (materials costing $125,000 were charged directly to jobs; the remaining materials were indirect).

Rent for the year was $18,600 ($13,300 of this amount related to factory operations, and the remainder related to selling and administrative activities).

Depreciation recorded on equipment, $24,000. ($17,000 of this amount was on equipment used in factory operations; the remaining $7,000 was on equipment used in selling and administrative activities.)

Manufacturing overhead cost was applied to jobs, $?

Sales for the year totaled $515,000. The total cost to manufacture these goods according to their job cost sheets was $215,000.

  
Required:

Prepare journal entries to record the transactions for the year. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your intermediate calculations to 2 decimal places.)

Prepare T-accounts for inventories, Manufacturing Overhead, and Cost of Goods Sold. Post relevant data from your journal entries to these t-accounts (don’t forget to enter the beginning balances in your inventory accounts). (Round your intermediate calculations to 2 decimal places.)

Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China market. The company sells its birdcages through an extensive network of street vendors who receive commissions on their sales. All of the company’s transactions with customers, employees, and suppliers are conducted in cash; there is no credit.

Explanation / Answer

$ Account Title Dr Cr Raw material Inventory 167000 cash 167000 Work in process 125000 Raw material Inventory 125000 Manufacturing Overhead 16000 Raw material Inventory 16000 Factory Payroll 364100 Factory Payroll payable 364100 Manufacturing Overhead 187100 Factory Payroll 187100 Work in Process 177000 Factory Payroll 177000 sales Commission 24000 Administrative Salaries 47000 sales Commission payable 24000 Salaries payable 47000 Rent Expense 5300 Manufacturing Overhead 13300 Rent payable 18600 Manufacturing Overhead 18000 Utilities Payable 18000 Advertising Expense 12000 Advertising Expense Payable 12000 Manufacturing Overhead 17000 Depreciation 7000 Accumulated depreciation 24000 Work in Process (1.5*177000) 265500 Manufacturing Overhead 265500 predetermined rate=67500/45000= 1.5 Finished Goods 227000 Work in process 227000 Account Receivable 515000 Sale 515000 cost of Good Sold 215000 Finished Goods 215000 Now actual manufacturing overhead 251400 Applied Overhead 265500 Overapplied 14100 Factory Overhead 14100 Cost of Good Sold 14100 Raw material Inventory Dr Cr Paticulars Amount Particulars Amount Bal Brought down 10800 Work in process 125000 cash 167000 Manufacturing Overhead 16000 Bal carried down 36800 Factory Payroll Dr Cr Paticulars Amount Particulars Amount Bal Brought down 0 Manufacturing Overhead 187100 Factory Payroll payable 364100 Work in Process 177000 Bal carried down 0 Manufacturing Overhead Dr Cr Paticulars Amount Particulars Amount Bal Brought down 0 Raw material Inventory 16000 Work in process 265500 Factory Payroll 187100 Bal carried down 0 Rent payable 13300 Accumulated depreciation 17000 COGS 14100 Utilities Payable 18000 Work in process Dr Cr Paticulars Amount Particulars Amount Bal Brought down 4200 Raw material Inventory 125000 Finished goods 227000 Manufacturing Overhead 265500 Bal carried down 344700 Factory Payroll 177000 Finished Goods Dr Cr Paticulars Amount Particulars Amount Bal Brought down 8800 Work in process 227000 Cost of Good sold 215000 Bal carried Down 20800 Cost of good Sold Dr Cr Paticulars Amount Particulars Amount Bal Brought down Factory Overhead 14100 Finished Goods 215000 Sales 215000 Bal carried Down 14100

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