Medina Manufacturing Company uses a simple manufacturing system.

At the end of its fiscal year on August

31, 2010, the adjusted trial balance contains the following accounts. 

  Debits Credits
  Cash $16,713 Accumulated Depreciation $352,880
  Accounts Receivable (net) 63,103 Notes Payable 45,499
  Finished Goods Inventory 55,835 Accounts Payable 28,582
  Work in Process Inventory 27,725 Income Taxes Payable 8,561
  Raw Materials Inventory 37,810 Common Stock 358,400
  Plant Assets 898,049 Retained Earnings 215,765
  Raw Materials Purchases 236,576 Sales 998,632
  Direct Labor 283,860 $2,008,319
  Indirect Labor 27,336
  Factory Repairs 17,072
  Factory Depreciation 16,157
  Factory manager's Salary 40,316
  Factory Insurance 11,479
  Factory Property Taxes 14,619
  Factory Utilities 13,494
  Selling Expenses 96,762
  Administrative Expenses 115,105
  Income Tax Expense 36,308
  $2,008,319
Physical inventory accounts on August 31, 2010, show the following inventory amounts: Finished Goods
$50,306, Work in Process $23,806, and Raw Materials $44,246.

Enter the adjusted trial balance data on the work sheet in financial statement order and complete the work sheet. (If
answer is zero, please enter 0, do not leave any fields blank.)

MEDINA MANUFACTURING

Worksheet

For the Year Ended August, 31 2010

Adjusted Trial Cost of Goods
Balance Manufactured Income Statement Balance Sheet
  Debit Credit Debit Credit Debit Credit Debit Credit
Cash 16,713 0 0 0 0 0 16,713 0
Accounts
receivable (net) 63,103 0 0 0 0 0 63,103 0
Finished Goods
inventory 55,835 0 0 0 55,835 50,306 50,306 0
Work in process
inventory 27,725 0 27,725 23,806 0 0 23,806 0
Raw materials
inventory 37,810 0 37,810 44,246 0 0 44,246 0
Plant assets 898,049 0 0 0 0 0 898,049 0
Accumulated
depreciation 0 352,880 0 0 0 0 0 352,880
Notes payable 0 45,499 0 0 0 0 0 45,499
Accounts
payable 0 28,582 0 0 0 0 0 28,582
Income taxes
payable 0 8,561 0 0 0 0 0 8,561
Common stock 0 358,400 0 0 0 0 0 358,400
Retained
earnings 0 215,765 0 0 0 0 0 215,765
Sales 0 998,632 0 0 0 998,632 0 0
Raw materials
purchases 236,576 0 236,576 0 0 0 0 0
Direct labor 283,860 0 283,860 0 0 0 0 0
Indirect labor 27,336 0 27,336 0 0 0 0 0
Factory repairs 17,072 0 17,072 0 0 0 0 0
Factory
depreciation 16,157 0 16,157 0 0 0 0 0
Factory
manager's salary 40,316 0 40,316 0 0 0 0 0
Factory
insurance 11,479 0 11,479 0 0 0 0 0
Factory property
taxes 14,619 0 14,619 0 0 0 0 0
Factory utilities 13,494 0 13,494 0 0 0 0 0
Administrative
expenses 115,105 0 0 0 115,105 0 0 0
Selling expenses 96,762 0 0 0 96,762 0 0 0
Income tax
Expense 36,308 0 0 0 36,308 0 0 0
    Totals 2,008,319 2,008,319 726,444 68,052
Cost of goods
manufactured   658,392 658,392      
     Totals 726,444 726,444 962,402 1,048,938 1,096,223 1,009,687
Net income 86,536 0 0 86,536
    Totals 1,048,938 1,048,938 1,096,223 1,096,223
Complete the cost of goods manufactured schedule for the year.

MEDINA MANUFACTURING COMPANY

Cost of Goods Manufactured Schedule

For the Year Ended August 31, 2010

      

Work in process, Sept. 1, 2009     27,725

Direct Materials      
$ 37,810
Raw materials, Sept. 1, 2009    

236,576    
Raw materials purchases
Total raw materials available for use 274386
   

    Less: Raw materials, August 31, 2010

44,246    

$ 230140
    Direct materials used    

283,860
Direct labor    

Manufacturing overhead      

  Factory manager's salary 40,316    

  Indirect labor 27,336    

  Factory repairs 17,072    

  Factory depreciation 16,157    

  Factory property taxes 14,619    

  Factory utilities 13,494    

  Factory insurance 11479    

      Total manufacturing overhead 140473
   

654473
Total manufacturing costs    

682198
Total cost of work in process    

Less: Work in process, August 31, 2010

    23,806

$ 658392
Cost of goods manufactured    

Complete the income statement for the year and a balance sheet at August 31, 2010. (List operating
expenses from largest to smallest amount, e.g. 10, 5, 2. List assets in order of liquidity, inventories and
liabilities from largest to smallest amount, e.g. 10,5, 2.)

MEDINA MANUFACTURING COMPANY

 Income Statement

For the Year Ended August 31, 2010

$ 998,632
Sales  

Cost of goods sold    

    Finished goods inventory, September 1, 2009
$ 55,835

    Cost of goods manufactured 658392

    Cost of goods available for sale 714227

     Less:Finished goods inventory, August 31, 2010
50,306  

          Cost of goods sold 663921

Gross profit 334711
Operating expenses  

    Administrative expenses 115,105  

    Selling expenses 96,762  

         Total operating expenses   211867

Income before income taxes   122844

Income tax expense 36308

Net income $  86536
MEDINA MANUFACTURING COMPANY

Balance Sheet

August 31, 2010

Assets
Current assets    

  Cash   $ 16,713

  Accounts receivable   63,103

  Inventories    

     Finished goods $ 50,306  

     Raw materials 44,246  

     Work in process 23,806 118358

         Total current assets   198174
Property, plant and equipment

    Plant assets 898,049

     Less: Accumulated depreciation 352,880 545169

          Total assets $ 743343
Liabilities and Stockholders' Equity
Current liabilities

    Notes payable $ 45499

    Accounts payable 28,582

    Income taxes payable 8,561

          Total current liabilities $ 82642
Stockholders' equity

    Common stock 358400

    Retained earnings 302301

          Total stockholders' equity 660701
          Total liabilities and stockholders' equity $ 743343

Correct.

   

Journalize the closing entries. (List multiple debit/credit entries from largest to smallest amount, e.g. 10, 5,
2.)

Date Account/Description Debit Credit

Aug.
Raw materials, August 31, 2010 44,246  
31
  Work in process, August 31, 2010 23,806  

           Manufacturing summary   68052

  (Close credit accounts to manufacturing summary)

Aug. 726,444
Manufacturing summary  
31

283,860
           Direct labor  

236,576
           Raw materials purchases  

           Factory manager's salary   40,316

           Raw materials, Sept. 1, 2009   37,810

         Work in process, Sept. 1, 2009

    27,725

           Indirect labor   27,336

           Factory repairs   17,072

           Factory depreciation   16,157

           Factory property taxes   14,619

           Factory utilities   13,494

           Factory insurance   11,479

  (Close debit accounts to manufacturing summary)

Aug. 998,632
Sales  
31
 Finished goods inventory, August 31, 2010
  50,306  

1048938
           Income summary  

  (Close credits to income summary)

Aug.
Income summary 962402  
31

           Manufacturing summary   658392

115,105
           Administrative expenses  

           Selling expenses   96,762

         Finished goods inventory, September 1,

    55,835
2009

           Income tax expense   36308

(Close debits to income summary)

Aug.
Income summary 86536  
31

           Retained earnings   86536

  (Close income summary)

Post the closing entries to the manufacturing summary and income summary and answer the following questions.

What are the total credits posted to manufacturing summary.

$726,444
What are the total debits posted to income summary.
$1,048,938

An analysis of the accounts of Chamberlin Manufacturing reveals the following manufacturing cost data for the
month ended June 30, 2010.
  Inventories Beginning Ending
  Raw materials $9,390   $14,730  
  Work in process 6,360   8,670  
  Finished goods 9,350   6,460  
Costs incurred: Raw materials purchases $56,340, direct labor $58,300, manufacturing overhead $23,610. The
specific overhead costs were: indirect labor $6,560, factory insurance $5,200, machinery depreciation $4,540,
machinery repairs $2,370, factory utilities $3,230, miscellaneous factory costs $1,710. Assume that all raw materials
used were direct materials.
Beginning with the adjusted trial balance, complete the partial worksheet for Chamberlin Manufacturing. (If an
answer is zero please enter 0, do not leave any fields blank.)
CHAMBERLIN MANUFACTURING

Work Sheet (Partial)

For the Month Ended June 30, 2010

Adjusted Trial Cost of Goods
Balance Manufactured Income Statement Balance Sheet
  Debit Credit Debit Credit Debit Credit Debit Credit
Finished Goods
inventory 9,350 0 0 0 9,350 6,460 6,460 0
Work in process
inventory 6,360 0 6,360 8,670 0 0 8,670 0
Raw materials
inventory 9,390 0 9,390 14,730 0 0 14,730 0
Raw materials
purchases 56,340 0 56,340 0 0 0 0 0
Direct labor 58,300 0 58,300 0 0 0 0 0
Indirect labor 6,560 0 6,560 0 0 0 0 0
Factory insurance 5,200 0 5,200 0 0 0 0 0
Machinery
depreciation 4,540 0 4,540 0 0 0 0 0
Machinery repairs 2,370 0 2,370 0 0 0 0 0
Factory utilities 3,230 0 3,230 0 0 0 0 0
Miscellaneous
factory costs 1,710 0 1,710 0 0 0 0 0
    Totals        154,000 23,400        
Cost of goods
manufactured 0 0 0 130,600 130,600 0 0 0
    Totals     154,000 154,000        

Chris Martin has prepared the following list of statements about managerial and financial accounting.

Identify each statement as true or false.

1. Financial accounting focuses on providing information to internal users.
False
2. Analyzing cost-volume-profit relationships is part of managerial accounting.

True
3. Preparation of budgets is part of financial accounting.

False
 4. Managerial accounting applies only to merchandising and manufacturing companies.
False
5. Both managerial accounting and financial accounting deal with many of the same economic events.
True
6. Managerial accounting reports are prepared only quarterly and annually.
False
7. Financial accounting reports are general-purpose reports.
True
8. Managerial accounting reports pertain to subunits of the business.
True
9. Managerial accounting reports must comply with generally accepted principles.
False
10. Although managerial accountants are expected to behave ethically, there is no code of ethical standards for
managerial accountants.

False

Table Manufacturing Company uses a work sheet in preparing financial statements. The following accounts are
included in the adjusted trial balance: Finished Goods Inventory $28,000, Work in Process Inventory $21,600, Raw
Materials Purchases $175,000, and Direct Labor $140,000. Indicate the work sheet column(s) to which each account
should be extended.

Account Work Sheet Column

Finished Goods Inventory Income Statement (Debit)
Work in Process Inventory Cost of Goods Manufactured (Debit)
Raw Materials Purchases Cost of Goods Manufactured (Debit)
Direct Labor Cost of Goods Manufactured (Debit)

P15-2A

For the year ended December 31, 2010, the job cost sheets of DeVoe Company contained the following data.

Direct Manufacturing Total

Job Number Explanation Materials Direct Labor Overhead Costs
7640 Balance 1/1 $25,000 $24,000 $28,800 $77,800
Current year's costs   30,000   36,000   43,200 109,200
7641 Balance 1/1   11,000   18,000   21,600   50,600
Current year's costs   43,000   48,000   57,600 148,600
7642 Current year's costs   48,000   55,000   66,000 169,000
 Other data:
1. Raw materials inventory totaled $15,000 on January 1. During the year, $140,000 of raw materials
were purchased on account.
2. Finished goods on January 1 consisted of Job No. 7638 for $87,000 and Job No. 7639 for $92,000.
3. Job No. 7640 and Job No. 7641 were completed during the year.
4. Job Nos. 7638, 7639, and 7641 were sold on account for $530,000.
5. Manufacturing overhead incurred on account totaled $120,000.
6. Other manufacturing overhead consisted of indirect materials $14,000, indirect labor $20,000, and
depreciation on factory machinery $8,000.

   

Prove the agreement of Work in Process Inventory with job cost sheets pertaining to unfinished work. Hint: Use a
single T account for Work in Process Inventory. Calculate each of the following, then post each to the T account: (1)
beginning balance, (2) direct materials, (3) direct labor, (4) manufacturing overhead, and (5) completed jobs.

Work in Process Inventory

1/1 Balance 128400    386200

 Completed Work

  Direct materials 121000       

  Direct labor 139000       

  Manufacturing overhead 166800       

12/31 Balance 169000       

$ 169000
Work in process balance

   

Unfinished job No. 7642 $ 169000

Work in Process Inventory

1/1 Balance (1) 128,400    Completed Work (5) 386,200

  Direct materials (2) 121,000      

  Direct labor (3) 139,000      

Manufacturing overhead
  166,800 
(4)      

12/31 Balance 169,000      

 (1) Job 7640 $77,800  (3) Job 7640 $36,000

  Job 7641 50,600    Job 7641 48,000

    $128,400    Job 7642 55,000
           $139,000
            
(2) Job 7640 $30,000  (4) Job 7640 $43,200
  Job 7641 43,000    Job 7641 57,600
  Job 7642 48,000    Job 7642 66,000
    $121,000      $166,800
(5) (a) Job 7640  

    Beginning balance $77,800

    Direct materials 30,000

    Direct labor 36,000

    Manufacturing overhead 43,200

      $187,000
       
  (b) Job 7641  
    Beginning balance $50,600
    Direct materials 43,000
    Direct labor 48,000
    Manufacturing overhead 57,600
      $199,200
       
  (c) Total cost of completed work  
    Job 7640 $187,000
    Job 7641 199,200
      $386,200
Work in process balance $169,000

   

Unfinished job No. 7642 $169,000 (a)

(a) Current year's cost  

     Direct materials $48,000

     Direct labor 55,000

     Manufacturing overhead 66,000

    $169,000

Account/Description Debit Credit

Manufacturing overhead 4,800  

        Cost of goods sold   4,800

Actual overhead costs  

   Incurred on account $120,000

   Indirect materials 14,000

   Indirect labor 20,000

   Depreciation 8,000
  $162,000
Applied overhead costs  

   Job 7640 $43,200

   Job 7641 57,600

   Job 7642 66,000

  $166,800
Actual overhead $162,000

Applied overhead 166,800

  $4,800
Determine the gross profit to be reported for 2010. (List job numbers in ascending order of job number.)

Sales   $530,000

Cost of goods sold    

Add: Job 7638 $87,000  

  Job 7639 92,000  

  Job 7641 199,200  

  378,200  
Less: Overapplied overhead 4,800 373,400
Gross profit   $156,600

Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing
overhead.
True

False
Period costs include selling and administrative expenses.
True

False

Which of the following is not a manufacturing cost category?

Cost of goods sold

Manufacturing overhead

Direct materials

Direct labor

Product costs are also called

overhead costs.

inventoriable costs.

direct costs.

capitalizable costs.

Correct.

   

Hopkins Manufacturing Inc.'s accounting records reflect the following inventories:

  Dec. 31, 2007 Dec. 31, 2008

Raw materials inventory $80,000 $64,000
Work in process inventory 104,000 116,000
Finished goods inventory 100,000 92,000
During 2008, Hopkins purchased $760,000 of raw materials, incurred direct labor costs of $100,000, and incurred
manufacturing overhead totaling $128,000.

How much is raw materials transferred to production during 2008 for Hopkins Manu-facturing?
$992,000

$776,000

$744,000

$760,000

Correct.

   

Raw materials inventory, January 1 $20,000

Raw materials inventory, December 31 40,000
Work in process, January 1 18,000
Work in process, December 31 12,000
Finished goods, January 1 40,000
Finished goods, December 31 32,000
Raw materials purchases 1,000,000
Direct labor 460,000
Factory utilities 150,000
Indirect labor 50,000
Factory depreciation 400,000
Selling and administrative expenses 420,000

Direct materials used is

$1,060,000.

$1,020,000.

$1,000,000.

$980,000.
 Correct.

   

The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the
total manufacturing costs.

total manufacturing overhead.

cost of goods manufactured.

total cost of work in process.

An incomplete cost of goods manufactured schedule is presented below.

Complete the cost of goods manufactured schedule for Cepeda Manufacturing Company.
CEPEDA MANUFACTURING COMPANY

Cost of Goods Manufactured Schedule

For the Year Ended December 31, 2010

Work in process (1/1)     $215,740
Direct materials      
$ 52600
     Raw materials inventory (1/1)    

     Add: Raw materials purchases 163,700    

     Total raw materials available for use 216300    
     Less: Raw materials inventory (12/31) 21,310    
Direct materials used   $194,990  
Direct labor   53320  
Manufacturing overhead      
     Indirect labor $ 18,350    
     Factory depreciation 45,690    
     Factory utilities 77,900    
     Total overhead   141,940  
Total manufacturing costs     390250

Total cost of work in process     605990

Less: Work in process (12/31)     86,870
Cost of goods manufactured     $519,120
Click here if you would like to Show Work for this question
AE14-9

Total raw materials available for use:  

     Direct materials used $194,990

     Add: Raw materials inventory (12/31) 21,310

     Total raw materials available for use $216,300
Raw materials inventory (1/1):  

     Direct materials used $194,990

     Add: Raw materials inventory (12/31) 21,310

     Less: Raw materials purchases 163,700

     Raw materials inventory (1/1) $52,600
Total cost of work in process:  

     Cost of goods manufactured $519,120

     Add: Work in process (12/31) 86,870

     Total cost of work in process $605,990
Total manufacturing costs:  

     Total cost of work in process $605,990

     Less: Work in process (1/1) 215,740

     Total manufacturing costs $390,250
Direct labor:  

     Total manufacturing costs $390,250

     Less: Total overhead 141,940

              Direct materials used 194,990

     Direct labor $53,320