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 $85,500 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 Work in process Finished goods S 10.800 S 5,000 s e-000 During the year, the following transactions were completed a. Raw materials purchased for cash, $162.000 b. Raw materials requisitioned for use in production, $148.000 (materials costing $123,000 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 $159.000 $220.800 s 23.000 S 48.000 d. Rent for the year was $18,800 ($13.400 of this amount related to factory operations, and the remainder related to selling and administrative activities) e. Utility costs incurred in the factory, $13,000 f. Advertising costs incurred, $13,000. g. Depreciation recorded on equipment, $25.000 ($15.000 of this amount was on equipment used in factory operations: the remaining $10.000 was on equipment used in selling and administrative h. Manufacturing overhead cost was applied to jobs, $2 i. Goods that had cost $229.000 to manufacture according to their job cost sheets were completed. j. Sales for the year totaled $510.000. The total cost to manufacture these goods according to their job cost sheets was $219.000. Required 1 Prepare journal entries to record the transactions for the year. (lf 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.) View transacfion list

Explanation / Answer

1.

2.

3-a.

Overapplied.

3-b.

Gold Nest Company General Journal for the eyar ended December 31 Ref Account Title Debit Credit a Raw Material 162000 Cash 162000 (Raw material purchased) b Work-in-process 123000 Manufacturing overheads 25000 Raw Material 148000 (Raw material issued for production) c Work-in-process 159000 Manufacturing overheads 220800 Salaries and wages 69000 Salaries and wages payable 448800 (Salaries and wages expense) d Manufacturing overheads 13400 Rent Expense (Selling and Admn) 5400 Rent Payable 18800 (Rent expense for the year) e Manufacturing overheads 13000 Utiltities Payable 13000 (Factory utilities) f Advertising Expense 13000 Accounts Payable 13000 (Advertising Expense incurred) g Manufacturing overheads 15000 Depreciation expense - office 10000 Accumulated Depreciation 25000 (Depreciation expense for the year) h Work-in-process 302100 Manufacturing overheads 302100 (Overhead applied to production @190% of direct labor cost) i Finished goods 229000 Work-in-process 229000 (Cost of jobs completed transferred to finished goods) j Accounts Receivable 510000 Sales 510000 (Sales dring the year) Cost ofgoods sold 219000 Finished goods 219000 (Cost of the goods sold during the year) Predetermined overhead rate Estimated overhead 85500 Estimated direct labor cost 45000 Overhead cost as a percentage of direct labor cost 190%

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