Answer:
Froya Fabrikker A/S of Bergen, Norway
1. Journal Entries:
a. Debit Raw materials $295,000
Credit Cash $295,000
To record purchase of raw materials
b. Debit Work in Process $280,000
Credit Raw materials $280,000
To record direct materials requisitioned for production.
c. Debit Manufacturing overhead $74,100
Debit Selling and Admin. $3,900
Credit Utilities Expenses $78,000
To record utilities expense for manufacturing and selling and admin.
d. Debit Work in Process $325,000
Debit Manufacturing overhead $109,000
Debit Selling and Admin. $205,000
Credit Salary and Wages Expense $639,000
To record labor costs for production, etc.
e. Debit Manufacturing overhead $73,000
Credit Maintenance Expense $73,000
To record factory maintenance expense.
f. Debit Selling and Admin. $155,000
Credit Advertising Expense $155,000
Tor record advertising expense.
g. Debit Manufacturing overhead $72,800
Debit Selling and Admin. $18,200
Credit Depreciation Expense $91,000
To record depreciation expense for production and selling and admin.
h. Debit Manufacturing overhead $89,250
Debit Selling and Admin $15,750
Credit Rent Expense $105,000
Rent expense for the year.
i. Debit Work in Process $326,000
Credit Manufacturing overhead $326,000
To apply overhead to production.
j. Debit Finished Goods $960,000
Credit Work in Process $960,000
To transfer completed jobs to finished goods inventory.
k. Debit Account Receivable $2,150,000
Credit Sales Revenue $2,150,000
To record the sale of goods on account.
k. Debit Cost of Goods Sold $990,000
Credit Finished Goods $990,000
To record the cost of goods sold.
2. T-accounts
Raw materials
Account Titles Debit Credit
Beginning Balance $49,000
Cash 295,000
Work in process $280,000
Ending balance 64,000
Work in process
Account Titles Debit Credit
Beginning Balance $40,000
Raw materials 280,000
Salaries and wages 325,000
Overhead 326,000
Finished Goods inventory $960,000
Ending balance 11,000
Finished Goods
Account Titles Debit Credit
Beginning Balance $79,000
Work in Process 960,000
Cost of goods sold $990,000
Ending balance 49,000
Cost of Goods Sold
Account Titles Debit Credit
Finished Goods $990,000
Underapplied overhead 92,150
Income Summary $1,082,150
Manufacturing Overhead
Account Titles Debit Credit
Utilities expense $74,100
Salaries and wages 109,000
Maintenance exp. 73,000
Depreciation exp. 72,800
Rent expense 89,250
Work in Process $326,000
Underapplied overhead 92,150
Totals $418,150 $418,150
Cash
Account Titles Debit Credit
Raw materials $295,000
Accounts receivable
Account Titles Debit Credit
Sales Revenue $2,150,000
Sales Revenue
Account Titles Debit Credit
Accounts receivable $2,150,000
Selling and Admin.
Account Titles Debit Credit
Utilities expense $3,900
Salaries and wages 205,000
Advertising expense 155,000
Depreciation exp. 18,200
Rent expense 15,750
3. Schedule of Cost of Goods Manufactured
Beginning WIP $40,000
Raw materials 280,000
Direct labor 325,000
Overhead 326,000
Total cost of production $971,000
Less ending WIP (11,000)
Cost of goods manufactured $960,000
4. Journal Entry to close Manufacturing Overhead to Cost of Goods Sold
Debit Cost of Goods Sold $92,150
Credit Manufacturing overhead $92,150
To close manufacturing overhead to cost of good of goods sold.
Schedule of Cost of Goods Sold
Finished Goods Inventory $960,000
Underapplied overhead 92,150
Total cost of goods sold $1,052,150
5. Income Statement for the year ended December 31
Sales Revenue $2,150,000
Cost of goods sold 1,052,150
Gross profit $1,097,850
Selling and Admin expenses:
Utilities expense $3,900
Salaries and wages 205,000
Advertising expense 155,000
Depreciation exp. 18,200
Rent expense 15,750
Total selling and admin. $397,850
Net Income $700,000
6. Job 412
Selling price per unit = $9,253
Explanation:
Estimated manufacturing overhead = $360,000
Estimated direct labor hours = 900
Predetermined overhead rate = $360,000/900 = $400 per DLH
Beginning Inventory Balances:
Raw materials $49,000
Work in process $40,000
Finished Goods $79,000
Job 412
Direct materials = $9,900
Direct labor hours = 35
Direct labor cost = $10,800
Applied overhead = $14,000 ($400 * 35)
Total cost = $34,700
Units in Job 412 = 6
Unit cost = $5,783 ($34,700/6)
Selling price = 60% markup
