Ladora Construction Company began operations on January 1, 2019, when it acquire
ID: 2547596 • Letter: L
Question
Ladora Construction Company began operations on January 1, 2019, when it acquired $30,000 cash from the issuance of common stock. During the year, Ladora purchased $6,000 of direct raw materials and used $5,640 of the direct materials. There were 108 hours of direct labor worked at an average rate of $20 per hour paid in cash. The predetermined overhead rate was $9 per direct labor hour. The company started construction on three prefabricated buildings. The job cost sheets reflected the following allocations of costs to each building:
Direct Materials Direct Labor Hours
Job 1 1440 30
Job 2 2400 50
Job 3 1800 28
The company paid $320 cash for indirect labor costs. Actual overhead cost paid in cash other than indirect labor was $640. Ladora completed Jobs 1 and 2 and sold Job 1 for $5,000 cash. The company incurred $600 of selling and administrative expenses that were paid in cash. Over- or underapplied overhead is closed to Cost of Goods Sold.
Required
A) Record T-accounts.
B) Reconcile all subsidiary accounts with their respective control accounts.
C) Record the closing entry for over- or underapplied manufacturing overhead in the horizontal statements model, 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 2019.
Explanation / Answer
Closing entry for over applied overheads:
Overhead expenses account Dr 12
To COGS 12
Cash To Capital 30,000 By Direct Materials 6,000 To Sales 5,000 By Direct Labor 2,160 By Overheads 960 By Selling and Administrative expenses 600 By Balance c/d 25,280 35,000 35,000 Direct Materials To Cash 6,000 By Job 1 1,440 By Job 2 2,400 By Job 3 1,800 By Inventory - Raw materials 360 6,000 6,000 360 Direct Labor To Cash 2,160 By Job 1 600 By Job 2 1,000 By Job 3 560 2,160 2,160 Overheads To Cash 320 By Job 1 270 To Cash 640 By Job 2 450 To COGS 12 By Job 3 252 972 972 Job 1 To Direct materials 1,440 By COGS 2,310 To Direct Labor 600 To Overheads 270 2,310 2,310 Job 2 To Direct materials 2,400 By Inventory - Finished goods 3,850 To Direct Labor 1,000 To Overheads 450 3,850 3,850 Job 3 To Direct materials 1,800 By Inventory - WIP 2,612 To Direct Labor 560 To Overheads 252 2,612 2,612 Cost of goods sold To Job 1 2,310 By Overheads 12 By Profit and loss 2,298 2,310 2,310Related Questions
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