value. 5.00 points Gold Nest Company of Guandong, China, is a family-owned enter
ID: 2474016 • Letter: V
Question
value. 5.00 points Gold Nest Company of Guandong, China, is a family-owned enterprise that makes birdcages for the South China marketThe 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 $108,000 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 Work in process Finished goods $ 10,400 $ 4,500 $ 8,900 During the year, the following transactions were completed: a Raw materials purchased for cash, $168,000 b. Raw materials requisitioned for use in production, $149,000 (materials costing $126,000 were charged directly to jobs, the remaining materials were indirect). C. Costs for employee services were incurred as follows : Direct labor Indirect labor Sales commissions Administrative salaries $174,000 $366,300 $ 28,000 $ 45,000 d. Rent for the year was $18200 ($13,000 of this amount related to factory operationsand the remainder related to selling and administrative activities). e. Utility costs incurred in the factory, $13,000 f Advertising costs incurred, $11,000 g. 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.) h. Manufacturing overhead cost was applied to jobs, $2 Goods that had cost $226,000 to manufacture according to their job cost sheets were completed. j. Sales for the year totaled $498,000. The total cost to manufacture these goods according to their job cost sheets was $217,000. Required 1. 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.)Explanation / Answer
Working
Predetermined Overhead rate = Estimated Manufacturing overhead/Estimated direct labor
Predetermined Overhead rate = 108000/45000
Predetermined Overhead rate = 2.40
Manufacturing Overhead applied = Predetermined Overhead rate * Direct labor cost
Manufacturing Overhead applied = 2.4*174000
Manufacturing Overhead applied = 417600
No Account Titles and Explanation Debit Credit a) Raw Material 168000 Cash 168000 b) Work in process 126000 Manufacturing Overhead 23000 Raw Material 149000 c) Work in process 174000 Manufacturing Overhead 366300 Selling & Addministrative Expenses 73000 Salary Payable 613300 d) Manufacturing Overhead 13000 Selling & Addministrative Expenses 5200 Cash 18200 e) Manufacturing Overhead 13000 Cash 13000 f) Selling & Addministrative Expenses 11000 Cash 11000 g) Manufacturing Overhead 17000 Selling & Addministrative Expenses 7000 Accumulated Depreciation 24000 h) Work in process 417600 Manufacturing Overhead 417600 i) Finished Goods 226000 Work in process 226000 j) Account Recievable 498000 Sale 498000 Cost of Good Sold 217000 Finished Goods 217000Related Questions
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