Prepare the necessary journal entries to record the transactions below. Use the
ID: 2472638 • Letter: P
Question
Prepare the necessary journal entries to record the transactions below. Use the charge of accounts shown in Table 1.
The information below reflects production and sales transactions for February 2011. Do not consider beginning or ending balances. The company uses one overhead account, closing it at the end of the month to the work in process inventory. You may assume that there are no raw materials or work in process inventories at the begining or end of the month. THe company uses actual costing to account for overhead, not normal or standard costing. You may ignore withholding and taxes on all payroll-related entries.
Production buys the necessary fill and fabric for the month. All raw materials are immediately placed into production.
Administrative salaries are paid, $15,000.00
Rent on the production building totaled $75,000. $10,000 of the total rent paid is considered to be for the administratove offices.
Wages of $960,000 for cutters and finishers.
Finishers' supervisors are paid $10,000.
Buttons, thread and beads used to finish the toys are purcharsed with cash: $24,000. The company lacks the technology to trace these small items to the toys being produced.
$12,000 in monthly depreciation on production equipment is recorded.
$10,000 in depreciation on the administrative and sales equipment, vehicles, etc. is recorded for the month.
120,000 toys were completed in January. Overhead expenses are closed to Work in Process inventory.
Cash sales of 50,000 toys totaling $750,000 are booked.
Assets
Cash
Prepaid Insurance
Inventory: administration
Inventory: animal food
Inventory: concession
Inventory: finished goods
Inventory: raw materials
Inventory: water chemicals
Inventory: water saline
Inventory: work in process
Manufacturing Overhead
Building and Equipment
Land
Liabilities
Accounts payable
Interest payable
Notes payable
Stockholders' equity
Stock
Retained earnings
Income summary
Income
Admission Revenues
Concession Sales
Plush Toy Sales
Expenses
Cost of goods sold
Animal food expense
Depreciation expense
Insurance expense
Interest expense
Maintenance expense
Salaries expense
Selling & administrative expense
Utilities expense
Water treatment expense
Assets
Cash
Prepaid Insurance
Inventory: administration
Inventory: animal food
Inventory: concession
Inventory: finished goods
Inventory: raw materials
Inventory: water chemicals
Inventory: water saline
Inventory: work in process
Manufacturing Overhead
Building and Equipment
Land
Liabilities
Accounts payable
Interest payable
Notes payable
Stockholders' equity
Stock
Retained earnings
Income summary
Income
Admission Revenues
Concession Sales
Plush Toy Sales
Expenses
Cost of goods sold
Animal food expense
Depreciation expense
Insurance expense
Interest expense
Maintenance expense
Salaries expense
Selling & administrative expense
Utilities expense
Water treatment expense
Explanation / Answer
Account title and explanation Debit($) Credit($) Salaries Expense 15,000.00 To Cash 15,000.00 (Being administration salaries paid) Maintenace expenses 65,000.00 Selling and administration Expenses 10,000.00 To Cash 75,000.00 (Being 75000 rent paid for production building of which 10000 related to administrative office) Cost of goods sold 9,60,000.00 To Cash 9,60,000.00 (being cash paid for cutters and finishers) Cost of goods sold 10,000.00 To Cash 10,000.00 (being cash paid for supervisors of finisher's) Cost of goods sold 24,000.00 To Cash 24,000.00 (being cash paid for purchase of buttons,threads and beads) Depreciation 22,000.00 To Production equipment 12,000.00 To Administration and sales equipment 10,000.00 (Being depreciation provided for) Cash 7,50,000.00 To Sales 7,50,000.00 (Being goods sold for cash)