ABC Co. recorded the following transactions for the just completed month. The co
ID: 2400560 • Letter: A
Question
ABC Co. recorded the following transactions for the just completed month. The company had no beginning inventories.
a) $157,000 in raw materials were purchased on account.
b) $135,000 in raw materials were requisitioned for use in production. Of this amount, $122,000 was for direct materials and the remainder was for indirect materials.
c) Total labor wages of $165,000 were incurred and paid. Of this amount, $145,000 was for direct labor and the remainder was for indirect labor.
d) Additional manufacturing overhead costs of $155,500 were incurred and paid.
e) Manufacturing overhead costs of $190,000 were applied to jobs using the company’s predetermined overhead rate.
f) Of the jobs in progress at the end of the month, $425,500 were completed and shipped to customers.
g) Any underapplied or overapplied overhead for the period was closed out to Cost of Goods Sold.
Required:
1. Post the above transactions to T-accounts (only to the T-accounts shown below). Label each entry.
Raw Material, Work in Process, Manufacturing O/H, Finished Goods, Cost of Goods Sold
2. Determine the cost of goods sold for the period.
Explanation / Answer
Solution 1:
Solution 2:
Cost of goods sold for the periods = $425,500 - $1,500 = $424,000
Raw material Event Particulars Debit Event Particulars Credit a Accounts payable $157,000.00 b Work In Process $122,000.00 b Manufacturing Overhead $13,000.00 Ending balance $22,000.00 Total $157,000.00 Total $157,000.00