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Problem 2-25A Journal Entries; T-Accounts; Financial Statements [LO1, LO2, LO3, LO4, LO5, LO6, LO7]

Southworth Company uses a job-order costing system and applies manufacturing overhead cost to jobs on the basis of the cost of direct materials used in production. Its predetermined overhead rate was based on a cost formula that estimated $234,000 of manufacturing overhead for an estimated allocation base of $156,000 direct material dollars.

The following transactions took place during the year (all purchases and services were acquired on account):

a.	Raw materials purchased, $144,000.
b.	Raw materials requisitioned for use in production (all direct materials), $149,000.
c.	Utility bills incurred in the factory, $21,000.
d.	Costs for salaries and wages were incurred as follows:

Direct labor	$	223,000
Indirect labor	$	91,400
Selling and administrative salaries	$	141,000

e.	Maintenance costs incurred in the factory, $17,000.
f.	Advertising costs incurred, $124,000.
g.	Depreciation recorded for the year, $41,000 (80% relates to factory assets, and the remainder relates to selling and administrative assets).
h.	Rental cost incurred on buildings, $82,000 (80% of the space is occupied by the factory, and 20% is occupied by sales and administration).
i.	Miscellaneous selling and administrative costs incurred, $12,000.
j.	Manufacturing overhead cost was applied to jobs, $ ?
k.	Cost of goods manufactured for the year, $552,000.
l.	Sales for the year (all on account) totaled $1,400,000. These goods cost $520,000 according to their job cost sheets.

The balances in the inventory accounts at the beginning of the year were as follows:

Raw Materials	$	18,000
Work in Process	$	21,000
Finished Goods	$	30,000

Required:

1.	Prepare journal entries to record the above data.

	General Journal	Debit	Credit
a.	(Click to select)Selling and administrative salariesWork in processManufacturing overheadRaw materialsSalaries and wages payableAccounts payableAdvertising expenseMiscellaneous expense
	(Click to select)Accounts payableSelling and administrative salariesAdvertising expenseWork in processManufacturing overheadSalaries and wages payableMiscellaneous expenseRaw materials
b.	(Click to select)Selling and administrative salariesManufacturing overheadWork in processAccounts payableAdvertising expenseSalaries and wages payableMiscellaneous expenseRaw materials
	(Click to select)Salaries and wages payableManufacturing overheadMiscellaneous expenseAdvertising expenseWork in processAccounts payableSelling and administrative salariesRaw materials
c.	(Click to select)Work in processSelling and administrative salariesSalaries and wages payableRaw materialsAdvertising expenseManufacturing overheadAccounts payableMiscellaneous expense
	(Click to select)Manufacturing overheadSalaries and wages payableService expensesWork in processAccounts payableRaw materialsAdvertising expenseMiscellaneous expense
d.	(Click to select)Salaries and wages payableMiscellaneous expenseWork in processSelling and administrative salariesAdvertising expenseManufacturing overheadRent expenseAccounts payable
	(Click to select)Salaries and wages payableWork in processAccounts payableManufacturing overheadAdvertising expenseSelling and administrative salariesMiscellaneous expenseRent expense
	(Click to select)Work in processManufacturing overheadSalaries and wages payableSelling and administrative salariesAdvertising expenseAccounts payableRent expenseMiscellaneous expense
	(Click to select)Advertising expenseMiscellaneous expenseSalaries and wages payableWork in processAccounts payableSelling and administrative salariesRent expenseManufacturing overhead
e.	(Click to select)Salaries and wages payableSelling and administrative salariesAccumulated depreciationManufacturing overheadMiscellaneous expenseAccounts payableDepreciation expenseAdvertising expense
	(Click to select)Miscellaneous expenseAdvertising expenseSalaries and wages payableManufacturing overheadSelling and administrative salariesAccounts payableDepreciation expenseAccumulated depreciation
f.	(Click to select)Accounts payableAccumulated depreciationDepreciation expenseSalaries and wages payableSelling and administrative salariesManufacturing overheadAdvertising expenseMiscellaneous expense
	(Click to select)Depreciation expenseAccounts payableAdvertising expenseSalaries and wages payableManufacturing overheadSelling and administrative salariesMiscellaneous expenseAccumulated depreciation
g.	(Click to select)Manufacturing overheadRent expenseMiscellaneous expenseAdvertising expenseDepreciation expenseSelling and administrative salariesAccumulated depreciationAccounts payable
	(Click to select)Accounts payableRent expenseSelling and administrative salariesManufacturing overheadAccumulated depreciationDepreciation expenseMiscellaneous expenseAdvertising expense
	(Click to select)Advertising expenseRent expenseAccumulated depreciationMiscellaneous expenseManufacturing overheadSelling and administrative salariesDepreciation expenseAccounts payable
h.	(Click to select)Advertising expenseDepreciation expenseRent expenseMiscellaneous expenseSelling and administrative salariesAccumulated depreciationManufacturing overheadAccounts payable
	(Click to select)Advertising expenseAccounts payableSelling and administrative salariesManufacturing overheadMiscellaneous expenseRent expenseDepreciation expenseAccumulated depreciation
	(Click to select)Depreciation expenseAccounts payableRent expenseManufacturing overheadSelling and administrative salariesAdvertising expenseAccumulated depreciationMiscellaneous expense
i.	(Click to select)Accounts payableManufacturing overheadSelling and administrative salariesSalaries and wages payableRent expenseAdvertising expenseWork in processMiscellaneous expense
	(Click to select)Advertising expenseSalaries and wages payableMiscellaneous expenseWork in processSelling and administrative salariesRent expenseAccounts payableManufacturing overhead
j.	(Click to select)Work in processFinished goodsSelling and administrative salariesSalaries and wages payableManufacturing overheadAdvertising expenseRent expenseMiscellaneous expense
	(Click to select)Manufacturing overheadAdvertising expenseMiscellaneous expenseSelling and administrative salariesRent expenseSalaries and wages payableWork in processAccounts payable
k.	(Click to select)Accounts payableFinished goodsSalesWork in processAccounts receivableSelling and administrative salariesCost of goods soldRaw materials
	(Click to select)Finished goodsAccounts payableAccounts receivableRaw materialsCost of goods soldSelling and administrative salariesWork in processSales
l	(Click to select)Accounts payableWork in processSalesSalaries and wages payableSelling and administrative salariesRaw materialsFinished goodsAccounts receivable
	(Click to select)Cost of goods soldSalesRaw materialsSalaries and wages payableAccounts receivableAccounts payableWork in processSelling and administrative salaries
	(Click to select)Cost of goods soldMiscellaneous expenseFinished goodsAccounts payableRaw materialsSalesSalaries and wages payableSelling and administrative salaries
	(Click to select)Accounts receivableSalaries and wages payableMiscellaneous expenseAccounts payableFinished goodsCost of goods soldSelling and administrative salariesRaw materials

2.	Post your entries to T-accounts. (Dont forget to enter the opening inventory balances above.) Determine the ending balances in the inventory accounts and in the Manufacturing Overhead account. (Record the transactions in the given order.)

Accounts Receivable

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Raw Materials

Bal.			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Work in Process

Bal.			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Finished Goods

Bal.			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Manufacturing Overhead

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
Bal.

Accounts Payable

			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(j)(i)(k)(l)
			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)
			Bal.

Accumulated Depreciation

			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Depreciation Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Salaries & Wages Payable

			(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Selling and Administrative Salaries

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Miscellaneous Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Advertising Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Rent Expense

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Cost of Goods Sold

(Click to select)(a)(b)(c)(d)(e)(f)(g)(h)(i)(j)(k)(l)

Sales

			(Click to select)(a)(b)(c)(d)(e)(f)(i)(g)(h)(j)(k)(l)

3.	Prepare a schedule of cost of goods manufactured. (Input all amounts as positive values.)

Southworth Company Schedule of Cost of Goods Manufactured
Direct materials:
(Click to select)Work in process, endingRaw materials inventory, endingRaw materials inventory, beginningFinished goods inventory, beginningWork in process, beginning	$
(Click to select)AddDeduct: (Click to select)Raw materials inventory, endingPurchases of raw materialsWork in process, beginningWork in process, endingFinished goods inventory, beginning
(Click to select)Work in process, endingWork in process, beginningMaterials available for useRaw materials inventory, beginningRaw materials inventory, ending
(Click to select)AddDeduct: (Click to select)Work in process, endingRaw materials inventory, beginningRaw materials inventory, endingWork in process, beginningPurchases of raw materials
Materials used in production		$
(Click to select)Direct laborPurchases of raw materialsRaw materials inventory, endingWork in process, endingRaw materials inventory, beginning
(Click to select)Direct laborRaw materials inventory, endingPurchases of raw materialsRaw materials inventory, beginningManufacturing overhead applied to work in process
Total manufacturing cost
(Click to select)DeductAdd: (Click to select)Raw materials inventory, beginningWork in process, beginningPurchases of raw materialsRaw materials inventory, endingWork in process, ending
(Click to select)AddDeduct: (Click to select)Purchases of raw materialsWork in process, beginningWork in process, endingRaw materials inventory, beginningRaw materials inventory, ending
Cost of goods manufactured		$

4.	Prepare a journal entry to close any balance in the Manufacturing Overhead account to Cost of Goods Sold. Prepare a schedule of cost of goods sold. (Input all amounts as positive values.)

General Journal	Debit	Credit
(Click to select)Accounts payableAccounts receivableFinished goodsWork in processCost of goods soldSelling and administrative salariesManufacturing overheadSalaries and wages payable
(Click to select)Salaries and wages payableSelling and administrative salariesFinished goodsAccounts payableAccounts receivableManufacturing overheadWork in processCost of goods sold

Schedule of cost of goods sold:
(Click to select)Unadjusted cost of goods soldFinished goods inventory, endingUnderapplied overheadGoods available for saleFinished goods inventory, beginning	$
(Click to select)DeductAdd: (Click to select)Underapplied overheadGoods available for saleOverapplied overheadUnadjusted cost of goods soldCost of goods manufactured
(Click to select)Unadjusted cost of goods soldFinished goods inventory, endingCost of goods manufacturedFinished goods inventory, beginningCost of goods available for sale
(Click to select)AddDeduct: (Click to select)Unadjusted cost of goods soldGoods available for saleOverapplied overheadFinished goods inventory, endingUnderapplied overhead
(Click to select)Finished goods inventory, beginningUnadjusted cost of goods soldCost of goods manufacturedFinished goods inventory, endingUnderapplied overhead
(Click to select)AddDeduct: (Click to select)Overapplied overheadFinished goods inventory, endingGoods available for saleUnderapplied overheadUnadjusted cost of goods sold
Adjusted cost of goods sold	$

5.	Prepare an income statement for the year. (Input all amounts as positive values.)

Southworth Company Income Statement
(Click to select)Cost of goods soldSalesSelling and administrative salariesAdvertising expenseRent expenseDepreciation expenseMiscellaneous expense		$
(Click to select)Rent expenseAdvertising expenseDepreciation expenseCost of goods soldMiscellaneous expenseSelling and administrative salariesSales
(Click to select)Gross marginGross loss
Selling and administrative expenses:
(Click to select)Miscellaneous expenseSelling and administrative salariesRent expenseInsurance expenseDepreciation expenseAdvertising expenseUtilities expense	$
(Click to select)Insurance expenseAdvertising expenseDepreciation expenseRent expenseUtilities expenseMiscellaneous expenseSelling and administrative salaries
(Click to select)Miscellaneous expenseUtilities expenseAdvertising expenseDepreciation expenseInsurance expenseRent expenseSelling and administrative salaries
(Click to select)Depreciation expenseAdvertising expenseMiscellaneous expenseInsurance expenseUtilities expenseRent expenseSelling and administrative salaries
(Click to select)Insurance expenseDepreciation expenseRent expenseSelling and administrative salariesAdvertising expenseMiscellaneous expenseUtilities expense
(Click to select)Net operating lossNet operating income		$

6.

Job 218 was one of the many jobs started and completed during the year. The job required $3,700 in direct materials and 500 hours of direct labor time at a rate of $13 per hour. If the job contained 600 units and the company billed at 50% above the unit product cost on the job cost sheet, what price per unit would have been charged to the customer? (Round your answer to 2 decimal places.)

Price charged for Job 218

$

per unit

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