Thai Bay’s computer system generated the following trial balance on December 31, 2011. The company’s manager knows something is wrong…
Cash $ 48,000
Accounts receivable 42,000
Raw materials inventory 26,000
Goods in process inventory 0
Finished goods inventory 9,000
Prepaid rent 3,000
Accounts payable $ 10,500
Notes payable 13,500
Common stock 30,000
Retained earnings 87,000
Cost of goods sold 105,000
Factory payroll 16,000
Factory overhead 27,000
Operating expenses 45,000
Totals $ 321,000 $ 321,000
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After examining various files, the manager identifies the following six source documents that need to be processed to bring the accounting records up to date.
Materials requisition 21-3010: $ 4,600 direct materials to Job 402
Materials requisition 21-3011: $ 7,600 direct materials to Job 404
Materials requisition 21-3012: $ 2,100 indirect materials
Labor time ticket 6052: $ 5,000 direct labor to Job 402
Labor time ticket 6053: $ 8,000 direct labor to Job 404
Labor time ticket 6054: $ 3,000 indirect labor
Jobs 402 and 404 are the only units in process at year-end. The predetermined overhead rate is 200% of direct labor cost.
1) Use information on the six source documents to prepare journal entries to assign the following costs.
a). Direct materials costs to Goods in Process Inventory.
b). Direct labor costs to Goods in Process Inventory.
c). Overhead costs to Goods in Process Inventory.
d). Indirect materials costs to the Factory Overhead account.
e). Indirect labor costs to the Factory Overhead account.
2). Determine the revised balance of the Factory Overhead account after making the entries in part 1. Determine whether there is any under- or overapplied overhead for the year. Prepare the adjusting entry to allocate any over- or underapplied overhead to Cost of Goods Sold, assuming the amount is not material.
3). Prepare a revised trial balance.
4). Prepare an income statement for year 2011 and a balance sheet as of December 31, 2011.
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