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Cost Accounting Chapter5 Problem1 3

The document outlines journal entries, T-accounts, and financial statements for three different entities: 1) A manufacturing company, with entries recording materials purchased, wages, overhead costs, transfers to work in process and finished goods, and cost of goods sold. 2) A merchandizing company, with entries recording expenses, purchases, freight costs, sales, and an income statement showing cost of goods sold and operating expenses. 3) A service company, with entries recording revenue, direct labor costs, overhead costs, and expenses, and an income statement showing gross profit and operating expenses.

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1K views9 pages

Cost Accounting Chapter5 Problem1 3

The document outlines journal entries, T-accounts, and financial statements for three different entities: 1) A manufacturing company, with entries recording materials purchased, wages, overhead costs, transfers to work in process and finished goods, and cost of goods sold. 2) A merchandizing company, with entries recording expenses, purchases, freight costs, sales, and an income statement showing cost of goods sold and operating expenses. 3) A service company, with entries recording revenue, direct labor costs, overhead costs, and expenses, and an income statement showing gross profit and operating expenses.

Uploaded by

Baby Mushroom
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© © All Rights Reserved
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Problem 1 (Flow of an accounting for the manufacturing company)

Requirement 1- Journal Entries


1 Direct material 80,000
Accounts Payable 80,000
To record purchased of direct material

2 Work in Process 42,000


Manufacturing Overhead 11,500
Wages payable 53,500
To record credit wages

3 Manufacturing Overhead 67,200


Accounts Payable 67,200
To record purchased of manufacturing overhead

4 Manufacturing Overhead 80,500


Accounts Payable 80,500
To record other manufacturing overhaed incurred

5 Work in Process 56,000


Direct material 56,000
To record 70% of direct material transferred to work in process

Work in Process 159,200


Manufacturing Overhead 159,200
To record all manufacturing overhead transferred to work in process

6 Finished Goods 154,320


Work in Process 154,320
To record 60% completed work

7 Cost of good sold 138,888


Finished Goods 138,888
To record 90% of the finished goods sold
Requirement 2- T-aacounts

Accounts Payable Wages Payable


1 80,000 2 2 53,500
3 67,200 53,500
4 80,500
227,700 Manufacturing Overhead
2 11,500 5 159,200
Direct Material 3 67,200
1 80,000 5 56,000 4 80,500
CB 24,000 -

Work in Process Finished Goods


2 42,000 6 154,320 6 154,320 7 138,888
5 56,000 CB 102,880 CB 15,432
159,200 257,200
257,200 Cost of good sold
- 7 138,888
138,888
Requirement 3- Cost of Good Sold Statement

Total Manufacturing Costs incurred


Direct Material 56,000
Direct Labor 42,000
Manufacturing Overhead 159,200 257,200
Less: Work in Process- CB (102,880)
Less: Finished Goods- CB (15,432)
Cost of Goods Sold 138,888
Problem 2(Flow of an accountingfor the merchandizer)

Requirement 1- Journal Entries


1 Marketing Expenses 197,000
Accounts Payable 197,000
To record on account marketing expense

2 Purchases 971,000
Accounts Payable 971,000
To record on account purchased

3 Freight in 26,000
Accounts Payable 26,000
To record transportation-in

4 Administrative Expense 400,000


Accounts Payable 400,000
To record on account administrative cost

6 Accounts Receivable 1,850,000


Sales Revenue 1,850,000
To record credit Sales

Cost of Good Sold


Merchandise inventory
Requirement 2- T-accounts

Accounts Receivable Accounts Payable


6 1,850,000 1 197,000
1,850,000 2 971,000
3 26,000
Purchases 4 400,000
2 971,000 1,594,000
971,000
Administrative Expense
Marketing Expenses 4 400,000
1 197,000 400,000
197,000
Sales Revenue
Freight in 6 1,850,000
3 26,000 1,850,000
26,000
Requierement 3- Income Statement

Sales 1,850,000
Less: Cost of Good Sold
Beginning inventory 314,000
Net purchases 971,000
Goods available for sale 1,285,000
Less: Ending inventory (297,000) (988,000)
Gross Profit 862,000
Les: Operating Expense
Marketing Expenses 197,000
Administrative Expense 400,000 597,000
Net Income 1,459,000
Problem 3 (Cost Flow in service organization)

Requirement 1- T-account

Accounts Receivable Accounts Payable


1 80,000 2 32,000
80,000 3 12,000
4 6,000
Direct LaborCost 50,000
2 32,000
32,000 Marketing and Administrative Cost
4 6,000
Overhead Cost 6,000
3 12,000
12,000 Service Revenue
1 80,000
80,000
Requirement 2- Income Statement

Service Revenue 80,000


Less: Direct Labor Cost (32,000)
Gross Profit 48,000
Total operating expenses
Overhead Cost 12,000
Marketing and Administrative Cost 6,000 (6,000)
Net income 42,000
Requirement 3- Journal Entries
1 Accounts Receivable 80,000
Service Revenue 80,000
To record on account service revenue

2 Direct LaborCost 32,000


Accounts Payable 32,000
To record labor cost incurred

3 Overhead Cost 12,000


Accounts Payable 12,000
To record overhead cost incuured

4 Marketing and Administrative Cost 6,000


Accounts Payable 6,000
To record on account cost

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