Turn in answers only on or before April 4, 2018 1. Creation Company produces gad

Question

Turn in answers only on or before April 4, 2018 1. Creation Company produces gadgets for the coveted small appliance market. The following data reflect activity for the year 2014 Costs incurred Purchases of direct materials (net) on credit $122,000 Direct manufacturing labor cost Indirect labor Depreciation, factory equipment Depreciation, office equipment Maintenance, factory equipment Miscellaneous, factory overhead Rent, factory building Advertising expense Sales commissions 83,000 54,000 32,000 7,900 29,000 9,900 78,000 94,000 33,000 Inventories: January 1, 2014 December 31, 2014 Direct materials Work in process Finished goods $9,800 6,300 68,000 13,000 23,000 27,000 Creation Co. uses a normal-costing system and allocates overhead to work in process at a rate of $2.60 per direct manufacturing labor dollar. Indirect materials are insignificant so there is no inventory account for indirect materials a. Prepare journal entries to record the transactions for 2014 including an entry to close out over- or underallocated overhead to cost of goods sold b. Post the journal entries to T-accounts for all of the inventories, Cost of Goods Sold, the Manufacturing Overhead Control Account

Explanation / Answer

a.

2.

Creation Co. General Journal for the year 2014 Ref Account Title Debit Credit a Raw Material Control 122000 Accounts Payable 122000 (prucase of raw material on account) b Work-in-process 83000 Wages Payable 83000 (Direct manufacturing labor ) c Manufacturing Overhead 54000 Wages Payable 54000 (Indrect manufacturinglabor ) d Manufacturing Overhead 32000 Acc. Depreciation - Factory Equipment 32000 (Depreciation of factory equipment) e Depreciation - Office Equipment 7900 Acc. Depreciation - Office Equipemnt 7900 (Depreciation of office equipment) f Manufacturing Overhead 29000 Accounts Payable 29000 (Maintenance of factory equipment) g Maintenance - Office Equipment 9900 Accounts Payable 9900 (Maintenance of office equipment) h Manufacturing Overhead 78000 Rent Payable 78000 (Rent for factory building) i Advertising Expense 94000 Accounts Payable 94000 (Advertising Expense) j Sales Commissions 33000 Accounts Payable 33000 (Sales commissions) k Work-in-process 118000 Raw Material Control 118000 (Direct material issued for production) l Work-in-process 215800 Manufacturing Overhead 215800 (Manufacturing overhead applied to production @$2.60 x 83,000) m Finished Goods Control 400100 Work-in-process 400100 (Transfer of finished goods) n Cost of goods sold 441100 Finished Goods Control 441100 (Cost of the goods sold during the period) o Manufacturing Overhead 22800 Cost of goods sold 22800 (Underapplied overhead transferred to cost     of goods sold)

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