Costs A 4.3 At the beginning of December, Cookie Company had the following accou
ID: 2334128 • Letter: C
Question
Costs A 4.3 At the beginning of December, Cookie Company had the following account balances: Raw Materials WIP Mixing Department WIP Baking Department WIP Packaging Department Finished Goods $5,000 $3,000 $2,400 $2,000 $40,000 $2,000 entry te ) units entory Manufacturing Overhead has a debit balance of ect labor Record the following transactions (assume all purchases and sales were on credit) On December 1st, Cookie Co. purchased $2,000 of eggs, $5,000 of flour, $1,800 of butter, $1,500 of a. plastic used in packaging, and $200 of WD-40 to be used on the mixing, baking, and packaging machines, and $2,500 of sugar. b. During the month, $10,000 of flour, sugar, butter, and eggs were issued to the mixing department, $6,000 of plastic is issued to packaging, $1,000 of butter was issued to baking, and $1,000 of WD-40 is issued to the maintenance staff to service the mixing, packaging and baking machines. c. Rent on the factory building was $20,000 for December. Depreciation on the mixing, baking, and packaging equipment was $5,000 total, administrative salary expenses were $10,000, depreciation on office equipment was $3,000, and office rent was $2,000. d. During the month employees worked 500 hours in mixing, 1,000 in baking, and 500 in packaging In addition, employees spent 200 hours performing maintenance on the equipment and performing janitorial work. All employees are paid $10 an hour. e. Cookie Co. uses direct labor hours as the allocation base for applying overhead. At the beginning of the year, it estimated there would be 25,000 direct labor hours and $300,000 of manufacturing overhead costs for the year. Under/over applied overhead is closed to COGS. 36Explanation / Answer
Solution:
Journal Entries - Cookie Company Event Particulars Debit Credit a Raw materials Dr ($2,000 + $5,000 + $1,800 + $1,500 + $200 + $2,500) $13,000.00 To Accounts payable $13,000.00 (To record raw material purchases on account) $0.00 b WIP Mixing Department Dr $10,000.00 WIP Packing Department Dr $6,000.00 WIP Baking Department Dr $1,000.00 Manufacturing overhead Dr $1,000.00 To Raw materials $18,000.00 (To record use of raw material in production) c Manufacturing overhead Dr $25,000.00 Salaries Expense Dr $10,000.00 Depreciation - Office Equipment Dr $3,000.00 Rent Expense Dr $2,000.00 To Accumulated depreciation - Factory equipment $5,000.00 To Accumulated depreciation - office equipment $3,000.00 To Salaries payable $10,000.00 To Rent payable $22,000.00 (To record factory and office expenses) d WIP Mixing Department Dr (500*$10) $5,000.00 WIP Packing Department Dr (500*$10) $5,000.00 WIP Baking Department Dr (1000*$10) $10,000.00 Manufacturing overhead Dr (200*$10) $2,000.00 To Factory Wages $22,000.00 (To record direct and indirect labor assigned to production) e-1 WIP Mixing Department Dr (500*$12) $6,000.00 WIP Packing Department Dr (500*$12) $6,000.00 WIP Baking Department Dr (1000*$12) $12,000.00 To Manufacturing overhead $24,000.00 (To record overhead applied) e-2 Cost of goods sold Dr ($2,000 + $1,000 + $25,000 + $2,000 - $24,000) $6,000.00 To Manufacturing overhead $6,000.00 (To close underapplied overhead to COGS) f-1 WIP Baking Department Dr $22,000.00 To WIP Mixing Department $22,000.00 (Being cost transferred from mixing to baking) f-2 WIP Packing Department Dr $44,984.00 To WIP Baking Department $44,984.00 (Being cost transferred from baking to packing) f-3 Finished goods inventory Dr $61,000.00 To WIP Packing Department $61,000.00 (Being completed goods transferred to finished goods) g-1 Accounts receivables Dr $300,000.00 To Sales Revenue $300,000.00 (To record cookies sold) g-2 Cost of goods sold Dr $90,000.00 To Finished goods inventory $90,000.00 (To record COGS)