For the year ended December 31, 2014, the job cost sheets of Cinta Company conta

Question

For the year ended December 31, 2014, the job cost sheets of Cinta Company contained the following data.

Job
Number

Explanation

Direct
Materials

Direct
Labor

Manufacturing
Overhead

Total
Costs

Other Data:

INSTRUCTIONS:

a.) Create individual job cost sheets for each job and record the information in them.

b.) Create individual Work in process inventory accounts for each job and one Summary Work in Process account.

c.) Enter beginning balances in each account.

d.) Record the appropriate journal entries for the current year’s activities and for the other data.Also post the information to T accounts. Determine the balance in Manufacturing Overhead and close the balance to Cost of Goods Sold.

e.) Prepare the top half of the traditional income statement, ending with the determination of Gross Profit.

Job
Number

Explanation

Direct
Materials

Direct
Labor

Manufacturing
Overhead

Total
Costs

7640 Balance 1/1 $25,000 $24,000 $28,800 $77,800 Current years costs 30,000 36,000 43,200 109,200 7641 Balance 1/1 11,000 18,000 21,600 50,600 Current years costs 43,000 48,000 57,600 148,600 7642 Current years costs 58,000 55,000 66,000 179,000

Explanation / Answer

Jobs 7640 7641 7642 Total Beginning balance 77800 50600 0 128400 Added during month Direct material 30000 43000 58000 131000 Direct labor 36000 48000 55000 139000 Overheads 43200 57600 66000 166800 Total cost 187000 199200 179000 565200 Work in progress account Beginning balance 128400 Direct material 131000 Direct labor 139000 Overheads 166800 Total cost 565200 Less transferred to Finished inventory 386200 Ending balance 179000 Journal entries 1 Raw material 140000              Accounts payable 140000 2 Work in progress 131000              Raw material 131000 3 Work in progress 139000              Wages payable 139000 4 Work in progress 166800              Manufacturing overheads 166800 5 Manufacturing overheads 120000              Accounts payable 120000 6 Manufacturing overheads 40000              Material inventory 14000               Wages payable 18000             Accumulated depreciation - factory machinery 8000 7 Finished goods inventory 386200             Work in progress 386200 8 Accounts receivable 530000              Sales revenue 530000 Cost of goods sold 378200               Finished goods inventory 378200 9 Manufacturing overheads 6800 (166800-160000)               Cost of goods sold 6800 Income statement Sales revenue 530000 Less Unadjusted cost of goods sold 378200 Overapplied manufacturing overheads -6800 371400 Gross profit 158600

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