Rodman Corporation was created on January 1, 2014, when it recieved a stockholde
ID: 2464996 • Letter: R
Question
Rodman Corporation was created on January 1, 2014, when it recieved a stockholders contribution of $46,000. It purchased $10,500 of raw materials and worked on three job orders during the year. Data about these jobs follow. (Assume all transactions are for cash unless otherwise indicated,)
DirectRaw Materials Direct Labor
Job 1 $4,000 $4,000
Job 2 $1,800 $4,800
Job 3 $3,200 $4,800
Total $9,000 $13,000
The average wage rate is $16 per hour. Manufacturing overhead is applied using a predetermined overhead rate of $7.50 per direct labor hour. Job 1 was sold for $13,000. Rodman paid $1,400 for selling and administrative expenses. Actual factory overhead was $6,000.
a) Record the preceeding events in a horizontal statements model. The fist event for 2014 has been recorded as an example.
Assets = Equity
CASH + Raw M + MOH WIP + F.GOODS = C. STK + Ret Ear. Rev - Exp = Net Inc
46,000 NA NA NA NA 46,000 + NA NA NA NA
b) Reconcile all subsidary accounts with their respective control accounts.
c) Record the closing entry for over or underapplied manufacturing overhead, assuming that the amount is insignificant.
d) Prepare a schedule of cost of goods manufactured and sold an income statement, and a balance sheet for 2014.
Explanation / Answer
a) Data can be reconcilled as
Finisged good sale has been calculated as
Direct material = 4000
Direct Labor = 4000
Overhead absorbed = No. of Labor hrs x 7.50, = 250 x 7.5 , =1875
Total =9875
No. of labor hrs = Direct labor exp / rate per hr, = 4000 /16 , =250 hrs
1c) Journal entry for over absorbtion is
<Manufacturing overheads 93.75
Work in process 93.75
1d) Schedule can be summarised as
Total Labor hours = Direct Labor cost / rate ,= 13000 / 16, =812.50
* Total hours = 812.50
Total overheads = 6000
Actual overhead rate= 6000 / 812.50, = 7.38
Hours applicable to job A = 250
Actual overheads applicable, = 1845
Assets Equity Cash Raw material Overhead WIP F Goods Common Stock Retained Earnings Revenue Less Expense Net increae Balance 46000 46000 Purchase -10500 10500 35500 10500 0 0 0 46000 0 JOB 1,2,3 Overheads -6000 6000 29500 10500 6000 0 0 46000 0 JOB 1,2,3 Labor -13000 13000 16500 10500 6000 13000 0 46000 0 Trf to finished Goods -9000 -6000 -13000 28000 16500 1500 0 0 28000 46000 0 Sale 13000 0 0 0 -9875 0 3125 13000 9875 3125 29500 1500 0 0 18125 46000 3125 Selling expense -1400 0 0 0 0 0 -1400 Balance 28100 1500 0 0 18125 46000 1725Related Questions
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