Problem 4-32 (Part Level Submission) Bramble uses a markup of 80% to price its a
ID: 2524542 • Letter: P
Question
Problem 4-32 (Part Level Submission)
Bramble uses a markup of 80% to price its airplanes. Sales for the year were $6,570,000. All sales are made on account.
(Note: This transaction requires two journal entries.)
(b)
Prepare the journal entries to record Bramble’s costs for 2017. (Use Salaries Payable and Wages Payable accounts for payroll costs.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Post entries in order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)
No.
Account Titles and Explanation
Debit
Credit
(To record salaries for president, vice president, and corpoarte secretary)
(To record salaried factory worker costs)
(To record hourly factory worker costs)
(To record depreciation on administrative office equipment)
(To record depreciation on factory building and equipment)
(To record administrative office utilities and office supplies expense)
(To record factory insurance and factory utilities)
(To record raw materials purchases)
(To record direct materials and indirect materials used in production)
(To apply overhead to work in process)
(To record transfer of completed airplanes)
(To record sale of airplanes to customers)
(To record cost of airplanes sold)
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Problem 4-32 (Part Level Submission)
Bramble Wings, Inc. manufactures airplanes for use in stunt shows. Bramble’s factory is highly automated, using the latest in robotic technology. To keep costs low, the company employs as few factory workers as possible. Since each plane has different features (such as its shape, weight, and color), Bramble uses a job order costing system to accumulate product costs.At the end of 2016, Bramble’s accountants developed the following expectations for 2017 based on the marketing department’s sales forecast:
Budgeted overhead cost $1,101,000 Estimated machine hours 46,000 Estimated direct labor hours 10,000 Estimated direct materials cost $1,510,000
Bramble’s inventory count, completed on December 31, 2016, revealed the following ending inventory balances:
Raw Materials Inventory $249,000 Work in Process Inventory $627,000 Finished Goods Inventory $2,200,000
The company’s 2017 payroll data revealed the following actual payroll costs for the year:
Job Title Number
Employed Wage Rate
per Hour Annual
Salary per
Employee Total Hours
Worked per
Employee President and CEO 1 $228,000 Vice president and CFO 1 $178,000 Factory manager 1 $40,900 Assistant factory manager 1 $31,300 Machine operator 5 $14.5 2,250 Security guard, factory 2 $20,500 Forklift operator 2 $7.5 2,000 Corporate secretary 1 $36,200 Janitor, factory 2 $6 2,150
The following information was taken from Bramble’s Schedule of Plant Assets. All assets are depreciated using the straight-line method.
Plant Asset Purchase Price Salvage Value Useful Life Factory building $4,000,000 $150,000 20 Years Administrative office $650,000 $125,000 30 Years Factory equipment $2,000,000 $20,000 12 Years
Other miscellaneous costs for 2017 all paid in cash included:
Cost Amount Factory insurance (fully expired) $14,000 Administrative office utilities $5,100 Factory utilities $32,700 Office supplies (fully consumed) $4,200
Additional information about Bramble’s operations in 2017 includes the following:
• Raw materials purchases for the year amounted to $1,948,000. All materials were purchased on account. • The company used $1,860,000 in raw materials during the year. Of that amount, 85% was direct materials and 15% was indirect materials. • Bramble applied overhead to Work in Process Inventory based on direct materials cost. • Airplanes costing $3,450,000 to manufacture were completed and transferred out of Work in Process Inventory. •
Bramble uses a markup of 80% to price its airplanes. Sales for the year were $6,570,000. All sales are made on account.
(Note: This transaction requires two journal entries.)
(b)
Prepare the journal entries to record Bramble’s costs for 2017. (Use Salaries Payable and Wages Payable accounts for payroll costs.) (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Post entries in order presented in the problem. Round answers to 0 decimal places, e.g. 5,275.)
No.
Account Titles and Explanation
Debit
Credit
1.(To record salaries for president, vice president, and corpoarte secretary)
2.(To record salaried factory worker costs)
3.(To record hourly factory worker costs)
4.(To record depreciation on administrative office equipment)
5.(To record depreciation on factory building and equipment)
6.(To record administrative office utilities and office supplies expense)
7.(To record factory insurance and factory utilities)
8.(To record raw materials purchases)
9.(To record direct materials and indirect materials used in production)
10.(To apply overhead to work in process)
11.(To record transfer of completed airplanes)
12.(To record sale of airplanes to customers)
13.(To record cost of airplanes sold)
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Explanation / Answer
1) (To record salaries for president, vice president, and corpoarte secretary) Salary exp A/c …..dr 442200 To salary payable A/c -4,42,200 2) (To record salaried factory worker costs) Manufactoring Cost 113200 To salary payable A/c -113200 (Being salary of Factory Manager,Assit Factory Manager,Security guard) 3) (To record hourly factory worker costs) Manufactoring Cost 218925 To Wages Payable A/c -218925 4) (To record depreciation on administrative office equipment) Depreciation a/c …..dr 17500 to accumulated Depreciation a/c -17500 5) (To record depreciation on factory building and equipment) Manufactoring Cost 357500 to accumulated Depreciation a/c -357500 6) (To record administrative office utilities and office supplies expense) administrative office utilities 5100 office supplies expense 4200 to Cash -9300 7) (To record factory insurance and factory utilities) Factory insurance 14000 Factory Utilities 32700 to Cash -46700 8) (To record raw materials purchases) Invetory-Raw Material 1948000 to Creditor -1948000 9) (To record direct materials and indirect materials used in production) Prime Cost 1581000 Manufacturing cost 279000 to Production cost -1860000 10) (To apply overhead to work in process) Work in process 1152707 Manufacturing Cost -1152707 11) (To record transfer of completed airplanes) Finished Good 3450000 to Work in progress -3450000 12) (To record sale of airplanes to customers) Debtor 6570000 to Sales -6570000 13) (To record cost of airplanes sold) COGS 3650000 to Finished Good -3650000 1) (To record salaries for president, vice president, and corpoarte secretary) Salary exp A/c …..dr 442200 To salary payable A/c -4,42,200 2) (To record salaried factory worker costs) Manufactoring Cost 113200 To salary payable A/c -113200 (Being salary of Factory Manager,Assit Factory Manager,Security guard) 3) (To record hourly factory worker costs) Manufactoring Cost 218925 To Wages Payable A/c -218925 4) (To record depreciation on administrative office equipment) Depreciation a/c …..dr 17500 to accumulated Depreciation a/c -17500 5) (To record depreciation on factory building and equipment) Manufactoring Cost 357500 to accumulated Depreciation a/c -357500 6) (To record administrative office utilities and office supplies expense) administrative office utilities 5100 office supplies expense 4200 to Cash -9300 7) (To record factory insurance and factory utilities) Factory insurance 14000 Factory Utilities 32700 to Cash -46700 8) (To record raw materials purchases) Invetory-Raw Material 1948000 to Creditor -1948000 9) (To record direct materials and indirect materials used in production) Prime Cost 1581000 Manufacturing cost 279000 to Production cost -1860000 10) (To apply overhead to work in process) Work in process 1152707 Manufacturing Cost -1152707 11) (To record transfer of completed airplanes) Finished Good 3450000 to Work in progress -3450000 12) (To record sale of airplanes to customers) Debtor 6570000 to Sales -6570000 13) (To record cost of airplanes sold) COGS 3650000 to Finished Good -3650000
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