2. Flow of Inventory Costs through the accounts: Bob N. DeWaves owns a yacht bui

Question

2. Flow of Inventory Costs through the accounts: Bob N. DeWaves owns a yacht building company. Bob had inventories at the beginning an end of 200X as follows: December 31, 20XX January 1, 20xX $45,000 66,000 64,000 $61,000 52,000 61,000 Raw Materials Inventory Work-in-Process Inventory Finished Goods Inventory During 20XX, Bob purchased raw materials of $415,000, incurred direct labor costs of $210,000, and applied manufacturing overhead of $296,000 to production (assume that $296,000 was what had gone into MOH). Assume that all the raw material used consisted of direct materials Required: Set up T-accounts to show the flow of costs through the company's inventory accounts during 20XX. Hint: See pages 10-4 and 10-5.

Explanation / Answer

Solution:

Raw Material Inventory Particulars Debit Particulars Credit Beginning balance $45,000.00 RM Consumed $399,000.00 RM Purchase $415,000.00 Ending balance $61,000.00 Total $460,000.00 Total $460,000.00

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